AEVEX swings to $23.9M loss on $190M Q3 revenue
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
AEVEX Corp. reported revenue of $189.697 million for the three months ended September 30, 2026, versus $121.235 million a year earlier. Net loss attributable to AEVEX was $23.858 million, compared with net income attributable to AEVEX of $9.889 million; the income tax provision was $41.722 million versus $0.040 million. For the nine months, revenue was $608.181 million versus $275.627 million, and net loss attributable to AEVEX was $0.604 million versus $29.284 million.
Nine-month operating cash flow was $40.773 million, compared with $14.060 million used a year earlier. As of September 30, 2026, remaining performance obligations were $444.3 million, with approximately 91.2% expected to be recognized as revenue during the next 12 months.
Total debt, net of issuance costs, was $172.497 million as of September 30, 2026, compared with $258.500 million as of December 31, 2025; $200.0 million was available under the revolving credit facility. AEVEX acquired 100% of BlackSea on September 8, 2026, for consideration with an estimated fair value of $497.055 million, including $279.3 million in cash and 12,727,273 Class A shares valued at $217.8 million.
2 points · 0 major1 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue was $189.697 million, versus $121.235 million a year earlier.
- Moderate pointNine-month operating cash flow was $40.773 million, versus a $14.060 million use.
Negative
- Major pointAEVEX cited remediation of material weaknesses as an internal-control risk.
- Moderate pointThird-quarter AEVEX-attributable net loss was $23.858 million, versus $9.889 million in net income.
Key Figures
Revenue, three months ended September 30, 2026: $189.697 million
Net loss attributable to AEVEX, three months ended September 30, 2026: $23.858 million loss
Revenue, nine months ended September 30, 2026: $608.181 million
+5 more
8 metrics
Revenue, three months ended September 30, 2026
$189.697 million
Compared with $121.235 million for the same 2025 period
Net loss attributable to AEVEX, three months ended September 30, 2026
$23.858 million loss
Compared with $9.889 million net income attributable to AEVEX for the same 2025 period
Revenue, nine months ended September 30, 2026
$608.181 million
Compared with $275.627 million for the same 2025 period
Net loss attributable to AEVEX, nine months ended September 30, 2026
$0.604 million loss
Compared with $29.284 million loss for the same 2025 period
Operating cash flow, nine months ended September 30, 2026
$40.773 million provided
Compared with $14.060 million used in the same 2025 period
Remaining performance obligations
$444.3 million
As of September 30, 2026; approximately 91.2% expected to be recognized as revenue during the next 12 months
BlackSea acquisition consideration
$497.055 million
Estimated fair value of consideration transferred at acquisition
Contingent consideration
$50.0 million
Seller may earn this amount in shares if specified stock-price and contract targets are met through December 31, 2027
Key Terms
Estimate at Completion, remaining performance obligations, Tax Receivable Agreement, Delayed Draw Term Loan Facility, +2 more
6 terms
Estimate at Completion financial
"contract cost Estimate at Completion process"
remaining performance obligations financial
"$444.3 million of remaining performance obligations"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
Tax Receivable Agreement financial
"entered into the Tax Receivable Agreement"
A contract in which a company agrees to pay a specified party (often former owners after a spinoff or IPO) a share of future tax savings the company realizes. Think of it like agreeing to share a future tax refund with someone who helped create the conditions for that refund. For investors it matters because those payments reduce the cash the company can use for dividends, buybacks, or reinvestment, and therefore affect valuation and returns.
Delayed Draw Term Loan Facility financial
"$75.0 million borrowing from its senior secured Delayed Draw Term Loan Facility"
A delayed draw term loan facility is a committed loan that a borrower can tap in one or more installments at specified future times after meeting agreed conditions, rather than receiving the full amount upfront. For investors it matters because it provides a ready source of cash that can change a company’s financial strength, leverage and interest costs when drawn—similar to having a reserved credit line you can use later, which affects liquidity and the risk profile of the business.
redeemable noncontrolling interests financial
"recorded redeemable noncontrolling interests in a consolidated entity"
A redeemable noncontrolling interest is a minority ownership stake in a company that the holder can force the company to buy back at a set price or under certain conditions. For investors this matters because it creates a future cash obligation and can be treated more like a liability than permanent equity, affecting a company’s reported debt, net income and valuation — think of it as a part-owner who can cash out, forcing the business to pay them.
volume weighted average price financial
"30-trading-day volume weighted average price"
The volume weighted average price (VWAP) is a way to measure the average price of a security, such as a stock, over a specific period, taking into account how many units were traded at each price. It’s similar to calculating the average cost of items bought when some are more frequently purchased than others. Investors use VWAP to assess whether a security is being bought or sold at a fair price during trading.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did AVEX report for the third quarter of 2026?
AEVEX reported $189.697 million in revenue for the three months ended September 30, 2026, compared with $121.235 million in the same period of 2025. Products contributed $148.107 million and services contributed $41.590 million.
What was AVEX’s third-quarter 2026 net loss?
Net loss attributable to AEVEX was $23.858 million for the three months ended September 30, 2026, compared with $9.889 million in net income attributable to AEVEX in the prior-year quarter. Consolidated net loss was $16.761 million in the 2026 quarter.
What conditions could trigger BlackSea’s $50 million contingent payment?
The seller may earn $50.0 million in additional contingent consideration if, from closing through December 31, 2027, the Class A stock’s 30-trading-day volume weighted average price equals or exceeds $28.00 per share during any 30 consecutive trading days and BlackSea meets either specified contract target: revenue of at least $24.8 million with $8.9 million gross profit, or revenue of at least $26.6 million with $9.6 million gross profit from specified autonomous vessel U.S. government contracts.
AI-generated analysis. How Rhea-AI works. Not financial advice.
See more from StockTitan in Google Search and AI answers.
Adds StockTitan as a preferred source · opens Google
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-43238
___________________________________
(Exact name of registrant as specified in its charter)
___________________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) | |||||||
(858 ) 704-4125
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o | Accelerated filer | o | |||||||||||
x | Smaller reporting company | |||||||||||||
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
As of November 12, 2026, the registrant had 69,197,606 shares of Class A common stock, $0.0001 par value per share outstanding and 57,571,367 shares of Class B common stock, $0.0001 par value per share outstanding.
Table of Contents
TABLE OF CONTENTS
| Page | ||||||||
FORWARD-LOOKING STATEMENTS | i | |||||||
GLOSSARY | iii | |||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements (Unaudited) | 1 | ||||||
Condensed Consolidated Balance Sheets (Unaudited) | 1 | |||||||
Condensed Consolidated Statements of Operations (Unaudited) | 2 | |||||||
Condensed Consolidated Statements of Changes in Equity and Redeemable Noncontrolling Interests (Unaudited) | 3 | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | 5 | |||||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 6 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 44 | ||||||
Item 4. | Controls and Procedures | 45 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 48 | ||||||
Item 1A. | Risk Factors | 48 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 48 | ||||||
Item 3. | Defaults Upon Senior Securities | 48 | ||||||
Item 4. | Mine Safety Disclosures | 48 | ||||||
Item 5. | Other Information | 48 | ||||||
Item 6. | Exhibits | 49 | ||||||
Signatures | 50 | |||||||
Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of AEVEX Corp. contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to the acquisition (the “Transaction”) of Maritime Applied Physics Corporation (“BlackSea”) and its integration and financial impact, BlackSea’s revenue and growth expectations, earnout targets related to the acquisition, our backlog, our total addressable market opportunity, our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, capital allocation priorities, growth or initiatives or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially and adversely from those set forth in, or implied by, such forward-looking statements. These risks and uncertainties include, but are not limited to:
•the effect of the Transaction and the public announcement of the Transaction on BlackSea’s operations and its relationships with its suppliers, business partners, management and employees, including its ability to attract and retain key personnel;
•the Company’s ability to successfully integrate BlackSea and execute on the continued development of its programs following the closing of the Transaction;
•the Company’s failure to meet its financial outlook and other goals and expectations, including with respect to BlackSea;
•the effect of media reports and rumors on our reputation and the price of the Company’s Class A common stock;
•our reliance on a limited number of major customers for a substantial portion of our revenue;
•the potential for reductions, delays, or changes in U.S. and foreign government budgets, spending priorities, procurement processes, or military transformation initiatives;
•our dependence on government contracts;
•increasing competitive pressures in our industry, including the risk that we are not able to expand our customer base, achieve broad market acceptance, or compete effectively against larger or better-resourced competitors;
•the markets into which we sell our products and services decline or do not grow as expected;
•our efforts to expand into new markets or introduce new offerings do not succeed;
•our inability to manage increasing technological complexity, scale manufacturing capacity, achieve cost reductions or realize projected economies of scale;
•claims that our complex products and services may contain unknown defects or errors;
•the scarcity, unavailability, or increased cost of critical components or raw materials;
•violations of export controls, sanctions and other regulations;
•political, economic and regulatory instability in foreign markets;
•our dependence on senior management and key employees;
•challenges in recruiting and retaining highly skilled personnel in a competitive labor market;
•challenges developing, commercializing or achieving market acceptance for new products, services or enhancements, particularly those involving artificial intelligence;
•changes in tax laws, trade policies, tariffs, inflation, recession and other macroeconomic or market conditions;
•difficulties executing, integrating or realizing expected benefits from acquisitions, and exposure to unexpected liabilities from such transactions, including with respect to the Transaction;
•pandemics, public health crises and other events that could disrupt our business, supply chain or customer demand;
•technological failures, cybersecurity breaches or unauthorized access to our, our customers’ or our suppliers’ information and systems;
•failure to protect, defend or enforce our intellectual property and proprietary rights;
•dependence on our facilities;
•the Company’s ability to remediate the material weaknesses with respect to the Company’s internal control over financial reporting and disclosure controls and procedures;
•the Company’s ability to implement and maintain effective internal control over financial reporting in the future;
•our inability to generate sufficient cash to service all of our indebtedness; and
•other factors set forth under the “Risk Factors” section in our most recent filings with the Securities and Exchange Commission.
i
Table of Contents
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the Securities and Exchange Commission and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
ii
Table of Contents
GLOSSARY
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:
•“AEVEX,” the “Company,” “our company,” “we,” “us” and “our” means (i) prior to the consummation of the Organizational Transactions, Holdings LLC and its consolidated subsidiaries and (ii) after the Organizational Transactions, AEVEX Corp. and its consolidated subsidiaries.
•“Blocker Entity” refers to the entity that was the owner of membership interests in Holdings LLC prior to the Organizational Transactions that is taxable as a corporation for U.S. federal income tax purposes.
•“Class A common stock” means Class A common stock, par value $0.0001 per share, of AEVEX Corp.
•“Class B common stock” means Class B common stock, par value $0.0001 per share, of AEVEX Corp.
•“Exchange Agreement” means the exchange agreement, dated as of April 16, 2026, by and among AEVEX Corp. and ATS Investment Holdings, LLC (“ATS Investment Holdings”).
•“Holdings LLC” means Athena Technology Solutions Holdings, LLC, a Delaware limited liability company and, following the Organizational Transactions, a subsidiary of AEVEX Corp.
•“IPO” refers to our initial public offering completed on April 20, 2026, and through which we offered 18,400,000 shares of our Class A common stock, which included the exercise in full by the underwriters of their option to purchase an additional 2,400,000 shares of our Class A common stock, at a price to the public of $20.00 per share.
•“LLC Operating Agreement” means the Third Amended and Restated Limited Liability Company Agreement of Holdings LLC dated as of April 17, 2026.
•“LLC Units” means the Series A and Series B membership units of Holdings LLC that as a result of the Organizational Transactions replaced the membership interests in Holdings LLC (i.e., Class A units) that existed immediately prior to the consummation of the Organizational Transactions. The Series A units and Series B units each represents a substantially identical interest in Holdings LLC, except that Series A units are only held by AEVEX Corp. and Series B units are held by ATS Investment Holdings, who also holds a corresponding number of shares of Class B common stock. Each LLC Unit entitles the holder to a pro rata share of the net profits and net losses and distributions of Holdings LLC. Holders of LLC Units have no voting rights, except as expressly provided in the LLC Operating Agreement. Series B units are not entitled to any voting rights with respect to AEVEX Corp., as the holders of such units are entitled to exercise voting rights through their corresponding shares of Class B common stock.
•“LLC Unitholders” means collectively, the owners of membership interests in Holdings LLC immediately prior to the consummation of the Organizational Transactions, and following the Organizational Transactions, AEVEX Corp. and ATS Investment Holdings, which became holders of Series A units, or Series B units and shares of our Class B common stock, respectively. ATS Investment Holdings (or certain of its permitted transferees) is entitled to exchange, at its option, from time to time, its Series B units, together with an equal number of shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis or, at our election, for cash, from a substantially concurrent public offering or private sale (based on the price of our Class A common stock in such public offering or private sale). In connection with an exchange of Series B units, a corresponding number of shares of Class B common stock, as applicable, shall be immediately and automatically transferred to AEVEX Corp. for no consideration and canceled.
•“New Credit Agreement” means the credit agreement, dated as of April 20, 2026, by and among AEVEX Holdings, LLC (the “Borrower”), an operating company of the Company, Athena Technology Solutions Purchaser, LLC, the lenders from time to time party thereto and Bank of America, N.A., as the administrative agent, collateral agent, an issuing bank and a swing line lender.
•“New Term Loan Facility” means the $100.0 million senior secured term loan facility under the New Credit Agreement.
iii
Table of Contents
•“New Delayed Draw Term Loan Facility” means the $75.0 million senior secured delayed draw term loan facility under the New Credit Agreement.
•“New Revolving Credit Facility” means the $200.0 million senior secured revolving credit facility under the New Credit Agreement, which includes a sublimit for the issuance of letters of credit in an amount up to $40.0 million and a sublimit for swing line loans in an amount up to $30.0 million.
•“New Credit Facilities” means the New Revolving Credit Facility together with the New Term Loan Facility and the New Delayed Draw Term Loan Facility under the New Credit Agreement.
•“Organizational Transactions” refers to the organizational transactions completed by the Company in connection with the IPO, as described in Note 1, Organization, to the unaudited condensed consolidated financial statements included herein.
•“Principal Stockholder” means funds and investment vehicles managed or controlled by Madison Dearborn Partners, LLC.
•“Prior Credit Facilities” means our former term loan and revolving credit facilities that were governed by that certain Credit Agreement, dated as of March 18, 2020 (as amended) by and among the Borrower, a syndicate of lenders, Ankura Trust Company, LLC, as administrative agent and PNC Bank, National Association as revolving agent and collateral agent.
•“Secondary Offering” refers to the offering of 8,000,000 shares of our Class A common stock completed on June 5, 2026, which included 5,726,157 shares offered by us and 2,273,843 shares offered by the selling securityholders, in each case at a price to the public of $27.00 per share. We used the net proceeds from this offering to purchase 5,726,157 Series B units, together with an equivalent number of shares of Class B common stock, from certain direct and indirect members of ATS Investment Holdings, including entities controlled by the Principal Stockholder. We did not receive proceeds from the sale of the shares of Class A common stock offered by the selling securityholders. The Secondary Offering did not increase the Company’s total shares outstanding and did not lead to shareholder dilution.
•“Tax Receivable Agreement” means the tax receivable agreement, dated April 16, 2026, by and among the Company, Holdings LLC and the TRA Rights Holders.
•“TRA Rights Holders” refers to, collectively, certain of the direct and indirect owners in Holdings LLC, including our Principal Stockholder.
iv
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AEVEX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and unit data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Contract assets | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Goodwill | |||||||||||
| Customer relationships and contracts, net | |||||||||||
| Other intangible assets, net | |||||||||||
Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income tax assets | |||||||||||
| Other assets | |||||||||||
| Asset held for sale | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities, Mezzanine Equity and (Deficit) Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Deferred revenue | |||||||||||
Current portion of long-term debt | |||||||||||
| Operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
Long-term debt, net of current portion | |||||||||||
| TRA liability | |||||||||||
| Operating lease liabilities, net of current portion | |||||||||||
| Series A preferred units derivative liability | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 9) | |||||||||||
| Mezzanine Equity: | |||||||||||
Series A preferred units, | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
Stockholders'/Members' Equity: | |||||||||||
Class A units, | |||||||||||
Class A common stock, $ | |||||||||||
Class B common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained (deficit) earnings | ( | ||||||||||
| Total stockholders'/members’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities, mezzanine equity, and equity | $ | $ | |||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
1
Table of Contents
AEVEX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Products | $ | $ | $ | $ | |||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Products | |||||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Total cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general, and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Change in contingent consideration | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income (loss) from operations | ( | ||||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Change in fair value of derivative liability | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other income (expense), net | ( | ( | ( | ||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net (loss) income | ( | ( | |||||||||||||||||||||
| Net income attributable to noncontrolling interest | |||||||||||||||||||||||
Net income attributable to redeemable noncontrolling interests | $ | ||||||||||||||||||||||
| Net (loss) income attributable to AEVEX Corp. | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Loss per share of Class A common stock: | |||||||||||||||||||||||
Basic(1) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Diluted(1) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Weighted average shares of Class A common stock outstanding: | |||||||||||||||||||||||
Basic(1) | |||||||||||||||||||||||
Diluted(1) | |||||||||||||||||||||||
(1) Represents net loss per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period following the Organizational Transactions. Earnings (loss) per share is presented for the period after the Organizational Transactions, April 17, 2026 to September 30, 2026. All earnings and losses prior to the Organizational Transactions were entirely allocable to the redeemable noncontrolling interests. Refer to Note 14, Earnings per Share, in the accompanying notes for additional details. | |||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
2
Table of Contents
AEVEX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (UNAUDITED)
(In thousands, except share and unit data)
| Redeemable Noncontrolling Interests | Members' Equity Class A Units | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of Series A preferred units | — | — | ( | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Class A units | — | ( | ( | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity prior to Organizational and IPO transactions: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to members | — | — | ( | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of Series A preferred units | — | — | ( | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of Organizational Transactions | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of IPO, net of underwriting discounts, commissions and deferred offering costs | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity subsequent to Organizational and IPO transactions: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of the Secondary Offering | ( | — | — | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of redeemable noncontrolling interests to redemption value | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| IPO deferred offering costs | ( | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity issued in business combination | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of business combination | ( | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| VIE deconsolidation (Note 8) | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of redeemable noncontrolling interests to redemption value | ( | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2026 | $ | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
3
Table of Contents
AEVEX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (UNAUDITED) (Continued)
(In thousands, except share and unit data)
| Redeemable Noncontrolling Interests | Members' Equity Class A Units | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | ( | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of equity in settlement of contingent consideration payment | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | ( | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
Table of Contents
AEVEX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Operating activities | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt issuance costs | |||||||||||
Noncash stock compensation expense | |||||||||||
Change in contingent consideration | |||||||||||
Deferred income taxes | |||||||||||
| Change in TRA liability | ( | ||||||||||
Noncash operating lease expense | |||||||||||
Provision for inventory obsolescence | |||||||||||
| Change in fair value of derivative liability | |||||||||||
| Loss on debt extinguishment | |||||||||||
Loss on sale of equipment | |||||||||||
Changes in operating assets and liabilities, net of acquisition: | |||||||||||
Accounts receivable, net | ( | ( | |||||||||
Contract assets | ( | ||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other current assets | ( | ( | |||||||||
Other assets | ( | ||||||||||
Accounts payable | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Deferred revenue | |||||||||||
Operating lease liabilities | ( | ( | |||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Investing activities | |||||||||||
| Acquisition of long-lived assets | ( | ||||||||||
Business acquisition, net of cash acquired | ( | ( | |||||||||
| VIE deconsolidation (Note 8) | ( | ||||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Proceeds from Series A preferred units, net of issuance costs | |||||||||||
| Repurchase of Class A units | ( | ||||||||||
Distributions to members | ( | ||||||||||
Distributions to noncontrolling interest | ( | ( | |||||||||
| Proceeds from issuance of Class B common stock | |||||||||||
Proceeds from notes payable | |||||||||||
| Payments of debt issuance costs | ( | ( | |||||||||
Repayment of notes payable | ( | ( | |||||||||
| Payment of debt extinguishment costs | ( | ||||||||||
| Proceeds from IPO, net of underwriting discounts and commissions | |||||||||||
Payments of offering costs | ( | ||||||||||
| Proceeds from secondary offering, net of underwriting discounts and commissions | |||||||||||
| Purchase of Series B units | ( | ||||||||||
Proceeds from revolving credit facility | |||||||||||
Repayment of revolving credit facility | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
AEVEX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
(In thousands)
Cash, cash equivalents and restricted cash: | |||||||||||
Beginning of period | |||||||||||
End of period(1) | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
| Cash paid (refunded) for income taxes | ( | ||||||||||
Supplemental disclosures of noncash financing and investing activities: | |||||||||||
Purchase of property, plant and equipment in accounts payable | $ | $ | |||||||||
Series A preferred units accretion | |||||||||||
| Deferred offering costs in accrued expenses | |||||||||||
| Equity issued in business combination | |||||||||||
| Equity issued in settlement of contingent consideration | |||||||||||
Right-of-use assets obtained in exchange for new lease liabilities | |||||||||||
| Transfer of fixed assets to inventory | |||||||||||
(1) As of September 30, 2026, other assets included $0.4 million of restricted cash related to a standby letter of credit as security for a customer contract.
See accompanying notes to the unaudited condensed consolidated financial statements.
5
Table of Contents
AEVEX CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE 1. ORGANIZATION
Nature of Operations
AEVEX Corp. (the “Company”) was formed as a Delaware corporation on October 27, 2025. The Company was formed for the purpose of completing a public offering and related transactions in order to carry on the business of Athena Technology Solutions Holdings, LLC (“Holdings LLC”) and its subsidiaries. As the manager of Holdings LLC, the Company operates and controls all of the business and affairs of Holdings LLC and, through Holdings LLC, continues to conduct the business historically conducted by its subsidiaries. Holdings LLC was formed as a Delaware limited liability company on February 13, 2020. The Company is a leading provider of full-spectrum airborne intelligence solutions for the global intelligence community.
Organizational Transactions and IPO
In connection with the consummation of the Company’s IPO on April 20, 2026, the Company and Holdings LLC undertook certain Organizational Transactions, including:
•The Company and Holdings LLC amended and restated the LLC Operating Agreement to, among other things, (i) modify the capital structure of Holdings LLC by replacing the historical membership interests (i.e., Class A units) with a new class of common membership interests consisting of Series A units and Series B units (referred to collectively as “LLC Units”) and (ii) appoint the Company as the sole managing member of Holdings LLC. The Series A units and Series B units each represent a substantially identical interest in Holdings LLC, except that Series A units are only held by AEVEX Corp. and Series B units are held by ATS Investment Holdings, who also holds a corresponding number of shares of Class B common stock. Each LLC Unit entitles the holder to a pro rata share of the net profits and net losses and distributions of Holdings LLC. Holders of LLC Units have no voting rights, except as expressly provided in the LLC Operating Agreement. Series B units are not entitled to any voting rights, as the holders of such units are entitled to exercise voting rights through their corresponding shares of Class B common stock.
•The Company’s Principal Stockholder and certain other holders of indirect interests in Holdings LLC engaged in a series of transactions, which included one or more contributions, mergers or otherwise, including the merger of the Blocker Entity, that resulted in certain LLC Unitholders contributing their direct or indirect membership interests in Holdings LLC to the Company in exchange for 25,135,300 shares of Class A common stock.
•The Company amended and restated its certificate of incorporation to, among other things, provide (i) for Class A common stock, with each share of Class A common stock entitling its holder to one one
•The Company issued 63,297,524 shares of Class B common stock to ATS Investment Holdings, on a one -to-one basis with the number of Series B units it owns, for $1.0 million.
•The Company entered into the Exchange Agreement pursuant to which ATS Investment Holdings (or certain permitted transferees thereof) is entitled to exchange its Series B units, together with an equal number of shares of Class B common stock, for shares of the Company’s Class A common stock on a one -for-one basis or, at the Company’s election, for cash, from a substantially concurrent public offering or private sale (based on the price of the Company’s Class A common stock in such public offering or private sale).
6
Table of Contents
•The Company entered into the Tax Receivable Agreement (“TRA”) with the TRA Rights Holders that requires the payment by the Company to such persons collectively of 85 % of certain tax savings, if any, in U.S. federal, state and local income taxes the Company actually realizes (or, under certain circumstances are deemed to realize) as a result of (i) certain increases in the tax basis of assets of Holdings LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain other tax attributes of Holdings LLC and its subsidiaries and the Blocker Entity that existed prior to the IPO, including existing tax basis and the Company’s allocable share of existing tax basis acquired in connection with the IPO and increases to such allocable share of existing tax basis and (iii) certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments that the Company is required to make under the TRA.
•The 115,342 of Holdings LLC’s Series A preferred units outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80 % of the IPO price.
•The Company issued 18,400,000 shares of its Class A common stock, which included the exercise in full by the underwriters of their option to purchase an additional 2,400,000 shares of Class A common stock, in exchange for net proceeds of approximately $345.9 million, at the IPO price of $20.00 per share, less $22.1 million of underwriting discounts and commissions.
•The Company used such net proceeds of approximately $345.9 million to acquire 18,400,000 newly-issued Series A units in Holdings LLC.
•On April 20, 2026, subsidiaries of Holdings LLC refinanced the Prior Credit Facilities and entered into the New Credit Facilities. Holdings LLC used the $100.0 million proceeds from the New Term Loan Facility and the proceeds it received from the Company for the purchase of the newly issued Series A units (i) to repay approximately $258.5 million of outstanding borrowings under the Prior Credit Facilities, (ii) to pay $3.3 million of expenses incurred in connection with the refinancing, (iii) to pay $8.3 million of expenses incurred in connection with the IPO and Organizational Transactions and (iv) for general corporate purposes.
Following the IPO, the Company has a minority economic interest in Holdings LLC but controls the management of Holdings LLC as its sole managing member. As a result, the Company consolidates Holdings LLC and has recorded significant redeemable noncontrolling interests in a consolidated entity in its consolidated financial statements for the economic interest in Holdings LLC held by ATS Investment Holdings.
Secondary Offering
On June 5, 2026, the Company completed the Secondary Offering of 8,000,000 shares of its Class A common stock, of which 5,726,157 shares were offered by the Company and 2,273,843 shares were offered by the selling securityholders, in each case at a price to the public of $27.00 per share. The Company used the net proceeds from the Secondary Offering to purchase 5,726,157 Series B units, together with an equivalent number of shares of Class B common stock from certain direct and indirect members of ATS Investment Holdings, including entities controlled by the Principal Stockholder. The Company did not receive proceeds from the sale of the shares of Class A common stock offered by the selling securityholders. The Secondary Offering did not increase the Company’s total shares outstanding and did not lead to shareholder dilution.
Basis of Presentation
The accompanying condensed consolidated financial statements present the financial position, results of operations, and cash flows of AEVEX Corp. and its subsidiaries, including a variable interest entity (“VIE”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes to the financial statements required by U.S. GAAP for complete financial statements. The functional currency of the Company and its subsidiaries is the U.S. dollar.
7
Table of Contents
These condensed consolidated financial statements should be read in conjunction with Holdings LLC’s audited consolidated financial statements and notes thereto, as of and for the years ended December 31, 2025 and 2024, and the Company’s audited balance sheet and notes thereto as of December 31, 2025 included in the prospectus dated April 16, 2026, as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position, results of operations, and cash flows for the periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. The condensed consolidated balance sheet as of December 31, 2025 was derived from Holdings LLC’s audited annual consolidated financial statements but does not contain all of the accompanying disclosures from the annual financial statements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Included below are selected significant accounting policies, including those that were added or modified during the three and nine months ended September 30, 2026 as a result of new transactions entered into or the adoption of new accounting policies. Refer to Note 2, Summary of Significant Accounting Policies, to Holdings LLC’s audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 for the remainder of the Company’s significant accounting policies.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of consolidated assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results could materially differ from those estimates. On an on-going basis, management evaluates its significant estimates, including those related to slow-moving or obsolete inventory, estimated useful lives of long-lived assets, the valuation of acquired intangible assets, goodwill impairment testing, the recognition of revenue over time for certain customer contracts, income taxes, the TRA liability, the number of performance-based restricted stock units that will vest, the valuation of the Series A preferred units embedded derivative liability, and the valuation of the Company’s contingent consideration liability.
Stock Compensation
8
Table of Contents
Income Taxes
Following the completion of the Organizational Transactions, the Company became subject to U.S. federal, state, and local income taxes on its share of taxable income earned through its interest in Holdings LLC assessed at the applicable corporate income tax rates. In addition, certain of the operating subsidiaries of the Company and Holdings LLC are taxed as C corporations for which a provision for income taxes has also been recorded. The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). The Company recognizes for AEVEX Corp. and the C-corporation operating subsidiaries deferred tax assets and liabilities for the expected future tax consequences of events that have been included in their tax returns or the consolidated financial statements. Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amount and the tax basis of assets and liabilities, along with net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized.
The Company evaluates its tax positions for any uncertainties based on the technical merits of the positions taken. The Company recognizes the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be upheld on examination by taxing authorities. The Company has analyzed the tax positions taken and has concluded that, as of September 30, 2026 and December 31, 2025, there were no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability or disclosure in the consolidated financial statements. Management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain state jurisdictions.
Tax Receivable Agreement
In connection with the Organizational Transactions, AEVEX Corp. entered into the TRA with the TRA Rights Holders, including the Principal Stockholder. The TRA provides for the payment by AEVEX Corp. to such pre-IPO owners of 85% of certain tax benefits, if any, that the Company actually realizes, as a result of (i) certain increases in the tax basis of the assets of Holdings LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii) certain other tax attributes of Holdings LLC and its subsidiaries and the Blocker Entity that existed prior to the IPO, including existing tax basis and the Company’s allocable share of existing tax basis acquired in connection with the IPO and increases to such allocable share of existing tax basis, and (iii) certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments that the Company makes under the TRA.
The Company accounts for the initial recognition of the estimated income tax effects resulting from the purchase or exchange of LLC Units via an increase in deferred income tax assets (net of any required valuation allowance), based on enacted tax rates at the date of the purchase or exchange, along with the corresponding increase in the estimated TRA liability, as a change in stockholders’ equity. Subsequently, the Company accounts for changes in the estimated amounts payable under the TRA in accordance with ASC Topic 450, Contingencies (“ASC 450”). As such, subsequent changes in the measurement of the estimated TRA liability between reporting periods are recognized as an adjustment to other income, net in the consolidated statements of operations.
Deferred Offering Costs
9
Table of Contents
Redeemable Noncontrolling Interests
The Company consolidates Holdings LLC and has recorded redeemable noncontrolling interests in a consolidated entity in its consolidated financial statements for the economic interest in Holdings LLC held by ATS Investment Holdings. The Series B units owned by ATS Investment Holdings are considered redeemable noncontrolling interests and are presented in mezzanine equity in the condensed consolidated balance sheet as of September 30, 2026 in accordance with ASC paragraph 480-10-S99-3A (Distinguishing Liabilities from Equity Topic) because they are redeemable upon the occurrence of an event that is not solely within the Company’s control. Since the holder of the redeemable noncontrolling interests and its affiliates control the Company’s Board of Directors, and since its exchange rights may be settled in cash at the Company’s election, the cash redemption is effectively in the control of the holders of the redeemable noncontrolling interests.
The carrying amount of the redeemable noncontrolling interests is equal to the greater of (1) the carrying value of the redeemable noncontrolling interests adjusted each reporting period for income or loss attributable to the redeemable noncontrolling interests or (2) the redemption value. The redemption value is calculated based on the closing price of Class A common stock at the end of each reporting period. Remeasurements to the redemption value of the redeemable noncontrolling interests are recognized as a deemed dividend each reporting period, which initially reduces retained earnings up to its full amount, as needed, then as a reduction to additional paid-in capital, to the extent any, and for any remainder as a further reduction to retained earnings within the consolidated balance sheets. The portion of the net income or loss attributable to redeemable noncontrolling interests is reported as net income or loss attributable to redeemable noncontrolling interests on the consolidated statements of operations.
Earnings Per Share
Basic earnings (loss) per share of Class A common stock is computed by dividing net earnings (loss) attributable to AEVEX Corp. by the weighted average number of Class A common shares outstanding during the period. The weighted average number of shares underlying the basic earnings (loss) per share calculation reflects only the shares of Class A common stock outstanding after the Organizational Transactions, as they are the only outstanding shares which participate in distributions or dividends by AEVEX Corp. Shares of Class B common stock are not participating securities and therefore are not included in the calculation of basic earnings (loss) per share. Diluted earnings (loss) per share is computed by dividing net earnings (loss) attributable to AEVEX Corp. by the weighted-average shares outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on earnings (loss) per share.
Fair Value Measurements
ASC 820, Fair Value Measurements, requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Level 1: Quoted prices in active markets for identical assets or liabilities which are easily traded;
Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs that are supported by little or no active market quotes and that are significant to the fair value of the assets or liabilities.
10
Table of Contents
The fair value measurement of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.
The Company’s consolidated financial instruments include cash, accounts receivable, accounts payable, and certain accrued expenses and other current liabilities. The fair value of accounts receivable, accounts payable, and accrued expenses and other current liabilities approximate their carrying value because of their short-term nature. The estimated fair value of the Term Loans (discussed in Note 6, Debt) is classified in Level 2 of the fair value hierarchy and approximates their carrying value as interest incurred is variable based on market rates.
Contingent Consideration Liability
As further discussed in Note 4, Acquisition, the Company is party to a contingent consideration arrangement that represents an obligation with a fixed monetary value known at inception that, if earned, will be settled with a variable number of shares of Class A common stock (and potentially a certain amount of cash). The liability for this obligation was recorded at its estimated fair value using third-party valuations i) as purchase consideration as of the closing date of the business combination, and ii) at each subsequent reporting date with changes in fair value recognized in earnings. The estimated fair value of the liability was measured using a Monte Carlo simulation and Level 3 inputs, which resulted in the contingent consideration liability being considered a Level 3 financial instrument. The significant unobservable inputs included: the estimated future revenue and profit of the subject customer contracts, expected volatility, and the estimated discount rate. The estimated fair value of the contingent consideration liability was immaterial as of the acquisition closing date and as of September 30, 2026.
Series A Preferred Units
During the three months ended March 31, 2026 and the year ended December 31, 2025, the Company issued 15,342 and 100,000 Series A preferred units, respectively, with conversion features that represented an embedded derivative that was accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings. In connection with the Organizational Transactions and IPO, the 115,342 of Series A preferred units outstanding were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80 % of the IPO price. The derivative liability was recorded at its estimated fair value at issuance, as of March 31, 2026 and December 31, 2025, and immediately prior to conversion and derecognition during the three months ended June 30, 2026 using a third-party valuation specialist and a probability-weighted expected return method (“PWERM”) using the “With and Without” approach (a form of an income approach). Under this approach management considered the various conversion scenarios that constitute the embedded derivative. The estimated fair value of the derivative liability was measured using Level 3 inputs which resulted in the liability being considered a Level 3 financial instrument. The significant unobservable inputs included: the estimated future cash flows of the Company, estimated WACC, estimated scenario probability and timing, and expected stock price volatility.
During the six months ended June 30, 2026, the derivative liability was adjusted and derecognized as follows (in thousands):
| Derivative Liability | |||||
| Balance at December 31, 2025 | $ | ||||
| Issuance of Series A preferred units | |||||
| Change in fair value of derivative liability | |||||
| Balance at March 31, 2026 | |||||
| Change in fair value of derivative liability | |||||
| Derecognition | ( | ||||
| Balance at June 30, 2026 | $ | ||||
11
Table of Contents
Concentrations
JOBS Act Accounting Election
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act of 2012. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. The Company has elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards until the earlier of the date the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements of the Company may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
New Accounting Pronouncements - Adopted
In July 2025, the FASB issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure credit losses on current accounts receivable and current contract assets under Accounting Standards Codification 606, Revenue from Contracts with Customers. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. For public business entities, ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Effective January 1, 2026, the Company adopted ASU 2025-05 regarding the practical expedient for expected credit loss and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.
New Accounting Pronouncements - Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220): Disaggregation of Income Statement Expenses, which requires additional disclosures of certain amounts included in the expense captions presented on the consolidated statements of operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impacts of adopting this guidance on its consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 simplifies capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendment requires entities to start capitalizing software costs when both of the following occur: 1) management has authorized and committed to funding the software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended. This guidance is effective for all entities for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years. Companies are permitted to apply the amendments using a prospective, retrospective, or modified transition approach. Early adoption is permitted. The Company is currently evaluating this guidance and the impact on its consolidated financial statements and related disclosures.
12
Table of Contents
NOTE 3. REVENUE
On a quarterly basis, the Company conducts its contract cost Estimate at Completion (“EAC”) process by reviewing the progress and execution of outstanding performance obligations within its contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs.
The table below summarizes the favorable (unfavorable) impact of changes in the estimated progress towards completion across programs for the three and nine months ended September 30, 2026 and 2025 (in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss attributable to AEVEX Corp.(1) | ( | — | ( | — | |||||||||||||||||||
Basic net loss per Class A share(1) | ( | — | ( | — | |||||||||||||||||||
Diluted net loss per Class A share(1) | ( | — | ( | — | |||||||||||||||||||
(1) Represents net loss per share of Class A common stock and weighted average shares of Class A common stock outstanding for the period following the Organizational Transactions. Earnings (loss) per share is presented for the period after the Organizational Transactions, April 17, 2026 to September 30, 2026. All earnings and losses prior to the Organizational Transactions were entirely allocable to the redeemable noncontrolling interests. Refer to Note 14, Earnings per Share, for additional details.
When estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at the contract level and is recorded in the period in which the loss is evident, which the Company refers to as a loss contract reserve. As of September 30, 2026 and December 31, 2025, the loss contract reserve balance was approximately $0.1
Accounts Receivable
During the three and nine months ended September 30, 2026 and 2025, the Company did not recognize any credit loss expense, and no receivables were written off.
Accounts receivable consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Billed accounts receivable | $ | $ | |||||||||
| Unbilled accounts receivable | |||||||||||
| Less: allowance for credit losses | |||||||||||
| Total accounts receivable, net | $ | $ | |||||||||
Contract Assets and Liabilities
Changes in contract assets and contract liabilities were primarily due to the timing of payments from customers and the Company satisfying performance obligations during the normal course of business. Revenue recognized during the three and nine months ended September 30, 2026 that was included in deferred revenue as of December 31, 2025 was $0.5 million and $4.0 million, respectively. Revenue recognized during the three and nine months ended September 30, 2025 that was included in deferred revenue as of December 31, 2024 was $0.1 million and $1.9 million, respectively.
13
Table of Contents
Disaggregation of Revenue
The following table presents the disaggregation of revenue from contracts with customers by customer location for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Other foreign countries | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Please refer to the condensed consolidated statements of operations for the disaggregation of revenue by products versus services and to Note 15, Segment Information, for disaggregation of revenue by reportable segment.
Performance Obligations
As of September 30, 2026, the Company had $444.3 million of remaining performance obligations. The Company expects to recognize approximately 91.2 % of the remaining performance obligations as revenue during the next 12 months and 8.8 % thereafter.
NOTE 4. ACQUISITION
BlackSea
Business combinations are accounted for using the acquisition method as required by ASC Topic 805, Business Combinations. Goodwill is measured as the excess of the acquisition-date fair value of consideration transferred over the fair value of the identifiable assets acquired and the liabilities assumed. Goodwill is attributed to management’s assessment of projected increases in overall revenues derived from the synergy of the combined service offerings, increased market penetration from the acquired customer base, and certain economies of scale. The consolidated financial statements include the results of operations and cash flows of companies acquired in business combinations from the acquisition date.
On September 8, 2026, the Company acquired 100 % of the equity interests of Black Sea Holdco, Inc., and indirectly of Maritime Applied Physics Corporation (together, “BlackSea”), one of the largest providers of unmanned surface and subsea vessels in the U.S. defense market. The BlackSea acquisition was accounted for as a business combination in accordance with ASC Topic 805.
The fair value of the consideration transferred to the seller for the acquisition at closing included $279.3 million of cash (excluding acquired cash and cash equivalents of $39.4 million), 12,727,273 shares of the Company’s Class A common stock with an acquisition date fair value of $217.8 million, and immaterial contingent consideration. The acquisition is subject to a post-closing purchase price adjustment of up to $5.0 million, which is currently held in escrow, based on BlackSea’s closing net working capital, cash, indebtedness and transaction expenses. As of September 30, 2026, the Company has recorded a preliminary estimated post-closing purchase price adjustment of $5.0 million as an increase to other current assets and a decrease to goodwill. The Company financed the cash portion of the purchase consideration with cash on hand and the $75.0 million borrowing from its senior secured Delayed Draw Term Loan Facility.
The Seller may earn additional, contingent consideration of $50.0 million if, during the period from the closing date through December 31, 2027, (i) the 30 -trading-day volume weighted average price of the Company’s Class A common stock equals or exceeds $28.00 per share during any 30 consecutive trading days in that period and (ii) BlackSea generates either (a) at least $24.8 million of revenue and $8.9 million of gross profit from specified autonomous vessel U.S. government contracts, or (b) at least $26.6 million of revenue and $9.6 million of gross profit from specified autonomous vessel U.S. government contracts. If earned, the $50.0 million will be paid in a variable number of shares (not to exceed 10,062,727 shares) of the Company’s Class A common stock based on the 30 -trading-day volume weighted average price as of December 31, 2027.
14
Table of Contents
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition (in thousands):
| BlackSea | |||||
| Cash and cash equivalents | $ | ||||
| Accounts receivable, net | |||||
| Contract assets | |||||
| Inventories | |||||
| Prepaid expenses and other current assets | |||||
| Operating lease right-of-use assets | |||||
| Intangible assets, trade name | |||||
| Intangible assets, technology | |||||
| Intangible assets, customer contracts | |||||
| Intangible assets, non-compete agreements | |||||
| Property, plant and equipment | |||||
| Other assets | |||||
| Total identifiable assets | |||||
| Accounts payable | |||||
| Accrued expenses | |||||
| Deferred revenue | |||||
| Operating lease liabilities | |||||
| Deferred tax liabilities | |||||
| Operating lease liabilities, net of current portion | |||||
| Total liabilities | |||||
| Total identifiable net assets | |||||
| Goodwill | |||||
| Total fair value of consideration transferred | $ | ||||
Assets acquired and liabilities assumed were recognized at their estimated fair values as of September 8, 2026. The estimated fair value of the identified intangible assets was determined by the Company as of the closing date. The trade name and developed technology were valued using the relief-from-royalty method under the income approach. Under this method, the value that the owner of the asset receives from not having to pay a royalty fee is estimated, as the owner is relieved from paying such fees since it owns the intangible asset. Significant assumptions included estimated future revenues, royalty rates, income tax rates, discount rates, and economic useful lives. The fair value of customer contracts was estimated using the multi-period excess earnings method, an income approach, which converts projected revenues and costs into cash flows. Significant assumptions used in the discounted cash flow analysis for customer contracts were the revenue growth rate, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), contributory asset charge, income tax rates and the discount rate. The fair value of non-compete agreements was estimated using the with-or-without method, an income approach. Significant assumptions included projected future cash flows, discount rate, and estimated probability of competition in the absence of the non-compete agreement. The fair value of the developed technology, customer contracts, trade name and non-compete intangible assets were determined to be $43.1 million, $76.3 million, $0.8 million and $1.2 million, respectively, and are being amortized over estimated useful lives of 7.0 years, 5.0 years, 0.5 years and 3.0 years, respectively. The goodwill recognized in the BlackSea acquisition is attributable to the differences between the estimated fair value of the consideration transferred and the estimated fair value of the assets acquired, and liabilities assumed, which includes the assembled workforce of BlackSea, opportunities to generate business from future customers, and expected future growth and market development.
15
Table of Contents
The estimated fair values of the acquired assets and assumed liabilities are subject to refinement as additional information relative to closing date fair values becomes available. Any subsequent adjustments to the fair values of acquired assets and liabilities assumed, identifiable intangible assets, or other purchase accounting adjustments will result in adjustments to goodwill for up to 12 months following the closing date of the acquisition. Goodwill recognized is substantially all non-deductible for income tax purposes.
Acquisition costs incurred were $7.4 million and $9.7 million for the three and nine months ended September 30, 2026, respectively. Acquisition costs were expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of operations.
The results of operations of BlackSea have been included in the consolidated financial statements of the Company from September 8, 2026, the closing date of the acquisition. For the three and nine months ended September 30, 2026, the Company’s consolidated results of operations included $13.0
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information summarizes the combined results of the Company and BlackSea as if the acquisition had occurred on January 1, 2025. The pro forma results have been prepared for comparative purposes only, and do not necessarily represent what the results of operations would have been had the acquisition been completed on January 1, 2025. In addition, these pro forma results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved. The unaudited pro forma financial information includes adjustments for the pro forma impact of the allocation of the purchase price recognized in connection with the acquisition (as summarized above). These adjustments primarily relate to the impact of incremental amortization expense attributable to the acquired intangible assets, incremental interest expense attributable to acquisition debt financing, acquisition costs and income taxes.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Pro forma total revenue | $ | $ | $ | $ | |||||||||||||||||||
| Pro forma net (loss) income | ( | ( | |||||||||||||||||||||
Contingent Consideration
The estimated fair value of the contingent consideration liability was immaterial as of the acquisition closing date and as of September 30, 2026.
NOTE 5. INVENTORIES
Inventories consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Parts and raw materials | $ | $ | |||||||||
| Work in progress | |||||||||||
| Total inventories | $ | $ | |||||||||
16
Table of Contents
NOTE 6. DEBT
The Company had the following debt outstanding as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Term Loans | $ | $ | |||||||||
| Revolving Credit Facility | |||||||||||
| Less: unamortized debt issuance costs | ( | ( | |||||||||
| Total debt | |||||||||||
| Less: current portion of long-term debt | ( | ( | |||||||||
| Total long-term debt, net of current portion | $ | $ | |||||||||
New Credit Facilities
On April 20, 2026, subsidiaries of the Company refinanced the Prior Credit Facilities and entered into the New Credit Facilities with the lenders and Bank of America, N.A., as the administrative agent, collateral agent, an issuing bank and a swing line lender. The New Credit Agreement provides for facilities in an aggregate principal amount of $375.0 million, consisting of (i) a senior secured Term Loan Facility with an aggregate principal amount of $100.0 million, (ii) a senior secured Delayed Draw Term Loan Facility with an aggregate principal amount of $75.0 million and (iii) a senior secured Revolving Credit Facility with an aggregate principal amount of $200.0 million, which includes a sublimit for the issuance of letters of credit in an amount up to $40.0 million and a sublimit for swing line loans in an amount up to $30.0 million. As of the closing of the Company’s IPO and as of September 30, 2026, the aggregate principal amount borrowed under the New Credit Facilities was $100.0 million from the Term Loan Facility. The New Revolving Credit Facility was undrawn at the closing of the IPO and as of September 30, 2026, and the Delayed Draw Term Loan Facility was not drawn at the closing of the IPO, but was fully drawn as of September 30, 2026 as a result of the business combination discussed in Note 4, Acquisition.
The New Credit Agreement is guaranteed by certain of the Borrower’s wholly-owned domestic subsidiaries and secured by substantially all of the Borrower’s assets and the assets of certain of the Borrower’s subsidiaries, in each case, subject to customary exceptions.
The New Credit Agreement contains certain affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens on assets, fundamental changes and asset sales, investments, negative pledges, repurchase of stock, dividends and other distributions, and transactions with affiliates. In addition, the New Credit Agreement contains financial covenants that require the Loan Parties (as defined in the New Credit Agreement) to comply with the following financial covenants (subject to certain equity cure rights):
•Commencing with the fiscal quarter ending September 30, 2026, maintain a maximum total net leverage ratio not to exceed 3.50 to 1.00 (provided that (a) after June 30, 2029, the total net leverage ratio shall not exceed 3.00 to 1.00 for any test period and (b) the maximum total net leverage ratio shall temporarily increase by 0.50 during the four fiscal quarters following the consummation of a material acquisition), in each case, tested as of the last day of each fiscal quarter; and
•Commencing with the fiscal quarter ending September 30, 2026, maintain a minimum interest coverage ratio for any period, of not less than 3.00 to 1.00, tested as of the last day of each fiscal quarter.
As of September 30, 2026, the Company was in compliance with the covenants in the New Credit Agreement.
The New Credit Facilities mature on April 20, 2031. Borrowings under the New Credit Agreement are available, at the Borrower’s option, as term SOFR loans or base rate loans. Term SOFR loans under the New Credit Agreement accrue interest at a SOFR rate plus an applicable rate of 2.25 % to 3.00 % (depending on the secured net leverage ratio of the Borrower and its restricted subsidiaries). Base rate loans under the New Credit Agreement accrue interest at a base rate plus an applicable rate of 1.25 % to 2.00 % (depending on the secured net leverage ratio of the Borrower and its restricted subsidiaries). The Revolving Credit Facility also has a variable commitment fee, which is tied to the secured net leverage ratio of the Borrower and its restricted subsidiaries, which ranges from 0.25 % to 0.50 % per annum. As of September 30, 2026, the interest rate was 6.46 % for the term SOFR loans.
17
Table of Contents
The New Revolving Credit Facility does not amortize. As of September 30, 2026, $200.0 million was available to be borrowed under the New Revolving Credit Facility and the unused letters of credit are $40.0 million. The New Term Loan Facility and the New Delayed Draw Term Loan Facility amortize in equal quarterly installments, commencing on September 30, 2026, in aggregate annual amounts according to the following amortization schedule:
Payment Dates | Annual Amortization Amount (percent of principal) | ||||
Year 1 | % | ||||
Year 2 | % | ||||
Year 3 | % | ||||
Year 4 | % | ||||
Year 5 | % | ||||
Future principal maturities of debt are due as follows (in thousands):
| Remainder of year ending December 31, 2026 | $ | ||||
| Year ending December 31, 2027 | |||||
Year ending December 31, 2028 | |||||
Year ending December 31, 2029 | |||||
Year ending December 31, 2030 | |||||
| Thereafter | |||||
| Total debt maturities | $ | ||||
The entry into the New Credit Agreement and the termination of the Prior Credit Facilities was accounted for as an extinguishment and the recognition of a $0.9 million loss on extinguishment of debt during the nine months ended September 30, 2026 that is included in interest expense in the condensed consolidated statement of operations.
Prior Credit Facilities
On March 18, 2020 the Company entered into a Credit Agreement (as amended by Amendment No. 1 to Credit Agreement, dated as of October 28, 2020, Amendment No. 2 to Credit Agreement, dated as of May 7, 2021, Amendment No. 3 to Credit Agreement, dated as of May 15, 2023, Amendment No. 4 to Credit Agreement, dated as of April 30, 2024 and Amendment No. 5 to Credit Agreement, dated as of September 15, 2025, the “Credit Agreement”) with a syndicate of lenders, Ankura Trust Company, LLC, as administrative agent and PNC Bank, National Association as revolving agent and collateral agent.
The Credit Agreement provided for a senior secured term loan facility (the “Term Loan”) in an original aggregate principal amount of $325.0 million. The Credit Agreement also provided for a super priority senior secured revolving credit facility in an aggregate principal amount of $25.0 million (the “Revolving Credit Facility” and, together with the Term Loan, the “Credit Facilities”). The Revolving Credit Facility included a $5.0 million sublimit for the issuance of letters of credit. The borrowings were guaranteed and secured by substantially all assets of the Company and its subsidiaries.
The Term Loans bore interest at a rate equal to (i) 5.00 % plus the base rate equal to the highest of (w) the prime rate, (x) the Federal funds open rate plus 0.50 % per annum and (y) a daily Term SOFR rate based on an interest period of one month plus 1.00 % per annum or (ii) Term SOFR plus 6.00 % per annum subject to a 1.00 % Term SOFR floor. The Revolving Credit Facility bore interest at a rate that corresponds to the most recent first lien net leverage ratio calculation. As of December 31, 2025, the interest rate was 9.92 % for the Term Loans and 9.75 % for the Revolving Credit Facility.
In addition to paying interest on loans outstanding under the Term Loan and the Revolving Credit Facility, the Company was required to pay a commitment fee of 0.50 % per annum of unused commitments under the Revolving Credit Facility. The Company was also required to pay customary fronting, issuance, and administrative fees for the issuance of letters of credit. Term Loan principal payments of $0.7 million (0.25 % of the aggregate amount borrowed) were due on the last business day of each quarter.
18
Table of Contents
The Company was required to comply with a maximum consolidated first lien net leverage ratio. On September 15, 2025, the Company amended the Credit Agreement to (a) extend the maturity date of the Term Loans and the Revolving Credit Facility from March 18, 2026, to March 18, 2028 and (b) modify the financial covenant to a consolidated first lien net leverage ratio of 9.00 x tested quarterly, starting with the quarter ended September 30, 2025. As of December 31, 2025, the Company was in compliance with the covenants in the Credit Agreement.
Loan Authorization Agreement
On October 9, 2025, a wholly owned subsidiary of the Company entered into a Loan Authorization Agreement with the Bank of Montreal from which the Company could from time to time request loans and letters of credit in an aggregate principal amount of $60.0 million. Immediately following the closing of the IPO on April 20, 2026, the Loan Authorization Agreement was terminated effective April 21, 2026.
NOTE 7. LEASES
In June 2026, the Company amended a lease entered into in February 2023 for its headquarters in Solana Beach, CA. The modified lease term is for 39 months subsequent to the modified lease commencement date. Undiscounted minimum lease payments related to this facility, which escalate annually over the term of the lease, total $2.5 million.
In July 2026, the Company executed a build-to-suit lease agreement and took possession of an approximately 83,000 -square-foot facility located in Tampa, Florida. The lease has an initial seven-year term commencing 91 days after possession. The agreement includes two optional five-year renewal periods at market rates in effect at the time of renewal. Total undiscounted minimum lease payments over the initial term are approximately $8.5 million.
The table below reconciles the undiscounted future minimum lease payments under non-cancelable operating leases with terms of more than one year to the total operating liabilities recognized on the consolidated balance sheet at September 30, 2026 (in thousands):
| Remainder of year ending December 31, 2026 | $ | ||||
| Year ending December 31, 2027 | |||||
| Year ending December 31, 2028 | |||||
| Year ending December 31, 2029 | |||||
| Year ending December 31, 2030 | |||||
| Thereafter | |||||
| Total future minimum lease payments | |||||
| Imputed interest | ( | ||||
| Present value of operating lease liabilities | $ | ||||
19
Table of Contents
NOTE 8. RELATED PARTIES
Variable Interest Entity
In 2022 the Company entered into an arrangement with a VIE to lease an aircraft, for the purpose of performing specified R&D activities. The VIE is a related party because it is owned by management or shareholders of the Company. The Company concluded that it held an implicit variable interest in the entity through the rental agreement and that it met the requirements for consolidation pursuant to the VIE sub-sections of ASC 810, Consolidation. On August 31, 2026, the Company provided written notice of lease termination to the VIE in accordance with the terms of the agreement, effective September 30, 2026. Further, for the 12-month period ending September 30, 2027, the Company agreed to pay the insurance costs for the aircraft and up to $0.25 million of aircraft maintenance expenses, such amounts being payable directly to third-party service providers.
The Company consolidated the VIE prior to September 30, 2026 because it was the primary beneficiary, having the power to direct the activities that most significantly affect the VIE’s economic performance. Additionally, the Company had the obligation to absorb losses that could be significant to the VIE through implied obligations resulting from the lease arrangement, specifically the indeterminate nature of the lease term, and the nature of the related party relationship. The VIE’s principal asset, the aircraft, can only be used to settle the obligations of the VIE. As a result of the lease termination, effective September 30, 2026, the Company no longer consolidates the VIE because it ceased to be the primary beneficiary, no longer having the power to direct the activities that most significantly affect the VIE’s economic performance, and the Company no longer has the obligation to absorb losses that could be significant to the VIE.
The original lease term was 1-year with automatic 6-month renewal options thereafter. During 2025, the Company and the VIE agreed that the lease term would expire on March 31, 2026 but would automatically renew for successive 6-month terms, unless either party provides written termination notice. On March 31, 2026, the lease term automatically renewed for a 6-month term. The lease could be terminated by either party at any time, for any reason. The lease did not contain a residual value guarantee and the Company was not obligated to provide any financial support to the VIE other than the lease payments. The Company does not have an equity interest in the VIE.
The noncontrolling interest reported in the Company’s consolidated balance sheets prior to September 30, 2026 represented the net assets of the VIE, and the net income of the VIE was reported in the Company’s consolidated statements of operations prior to September 30, 2026 as being attributable to the noncontrolling interest. Total payments made to the VIE were $0.1 0.2 0.1 0.2 0.1 0.2
As a result of the aircraft becoming available to sell in its present condition in October 2025 and all of the other held for sale criteria having been met, the aircraft was determined to be held for sale for accounting purposes. Accordingly, during October 2025, the Company reclassified the aircraft from property and equipment to asset held for sale in the Company’s consolidated balance sheet as of December 31, 2025 and ceased depreciation. No loss was recognized to measure the aircraft at the lower of its carrying value or fair value less costs to sell. The Company’s condensed consolidated balance sheet as of December 31, 2025 included the below assets of the VIE (in thousands). The VIE did not have any outstanding obligations as of December 31, 2025.
| December 31, 2025 | |||||
| Cash and cash equivalents | $ | ||||
Aircraft held for sale, net (net of accumulated depreciation of $ | |||||
| Total assets | $ | ||||
Depreciation expense related to the aircraft held for sale was $0 and $0.1 million for the three months ended September 30, 2026 and 2025, respectively, and $0 and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively.
20
Table of Contents
Related Party Leases
The Company has certain leases whereby it rents office and warehouse space and certain fixed assets from entities owned by management or shareholders of the Company. These leases range in terms from month-to-month agreements, to having expiration dates through April 2033. Total payments made to these related parties were $0.5 million and $0.4 million during the three months ended September 30, 2026 and 2025, respectively, and $1.4 million and $1.2 million during the nine months ended September 30, 2026 and 2025, respectively. Total lease cost related to these leases was $0.5 million and $0.4 million during the three months ended September 30, 2026 and 2025, respectively, and $1.3 million and $1.2 million during the nine months ended September 30, 2026 and 2025, respectively.
The following table presents the ROU assets and lease liabilities recognized as of September 30, 2026 and December 31, 2025 related to these leases with related parties (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Operating lease ROU assets | $ | $ | |||||||||
| Operating lease liabilities, current portion | |||||||||||
| Operating lease liabilities, net of current portion | |||||||||||
Series A Preferred Units
During the three months ended March 31, 2026, the Company entered into two Unit Purchase Agreements with Radz Capital AEVEX Holdings Inc., pursuant to which the Company issued 15,342 Series A preferred units under the LLC Operating Agreement for aggregate cash proceeds of $15.3 million. The transactions closed during the three months ended March 31, 2026. Mr. Raduenz, Executive Chairman of the Company, is the President of Radz Capital AEVEX Holdings Inc. The $15.3 million fair value at issuance (net of $25 thousand of issuance costs) was allocated between the Series A preferred units and the derivative liability, with the net proceeds first allocated to the derivative at its estimated fair value of $3.1 million and the remainder of $12.2 million was allocated to the Series A preferred units. In connection with the Organizational Transactions and the IPO, the 15,342 of Holdings LLC’s Series A preferred units outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into shares of the Company’s Class A common stock at a conversion price based on 80 % of the IPO price. Refer to Note 13, Mezzanine Equity, for further discussion.
Refer to Note 11, Income Taxes and Tax Receivable Agreement, for discussion of the income tax distributions to the
LLC Unitholders, and Note 12, Stockholders’ Equity / Members’ Equity, for discussion of the Secondary Offering that involved certain direct and indirect members of ATS Investment Holdings, including entities controlled by the Principal Stockholder.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Government Regulation
As a government contractor, the Company is subject to various state and federal laws and regulations, which, among other things, impose limits on interest rate charges and insurance premiums and require licensing and other qualifications.
Litigation
On August 20, 2026, a putative securities class action captioned Rosenberg v. AEVEX Corp., et al., Case No. 3:26-cv-04779-TWR-SBC (the “Securities Class Action”), was filed in the United States District Court for the Southern District of California against the Company, certain of its current and former officers and directors, Madison Dearborn Partners, LLC, and the underwriters of the IPO. The complaint asserts claims under Sections 11, 12 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on behalf of purchasers of the Company’s Class A common stock. The complaint generally alleges that the defendants made materially false or misleading statements or omissions concerning the 180-day lock-up applicable to shares held by Madison Dearborn Partners, LLC following the IPO. The complaint seeks various forms of relief, including unspecified compensatory damages.
21
Table of Contents
On September 11, 2026, two purported stockholders filed derivative actions in the United States District Court for the Southern District of California against certain of the Company’s current and former directors and officers, Madison Dearborn Partners, LLC, and the underwriters of the IPO, naming the Company as a nominal defendant. The derivative actions generally arise from the same allegations underlying the Securities Class Action and assert claims of breach of fiduciary duties, waste, unjust enrichment, fraud, and violations of federal securities laws. The derivative actions seek various forms of relief, including unspecified compensatory damages. On October 5, 2026, the actions were consolidated and stayed pending final resolution of any motion to dismiss in the Securities Class Action.
At this time, we are unable to predict the outcome of these proceedings, determine whether a loss is probable or reasonably possible, or reasonably estimate the amount or range of any possible loss.
The Company is also subject to other various claims and legal proceedings. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material effect on the financial condition or results of operations of the Company. Costs associated with the Company’s involvement in legal proceedings are expensed as incurred.
Government Rate Filings
At the beginning of each year, the Company files its provisional billing rates with the U.S. Government. The Company uses these rates for billing purposes throughout the fiscal year. Within six months of its fiscal year-end, the Company files an Incurred Cost Proposal (“ICP”) with the U.S. Government which details its actual costs and actual rates incurred for that year. The Company will then be notified by the government at some time in the future, which may be up to six years later, that the indirect rates have either been accepted by the government or that the government intends to conduct an incurred cost audit. Both options will eventually result in a final indirect rate letter that the Company must approve and sign off on with the government. Once that process has been completed, the Company will apply those approved rates to contracts that require being closed out (i.e., issuance of a final invoice) which may result in an amount owed to or due from the government. The Company has recorded an estimated rate impact in the accompanying consolidated financial statements. As of September 30, 2026 and December 31, 2025, the estimated rate reserve was $0.1
Contractual Commitments
The Company has certain contractual purchase commitments under agreements with remaining terms in excess of one year that are $2.3 million in the aggregate as of September 30, 2026.
NOTE 10. STOCK COMPENSATION
2026 Omnibus Incentive Plan
On April 16, 2026, and in connection with the IPO, the Company adopted the AEVEX Corp. 2026 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, and substitute awards to employees, consultants and non-employee directors, and employees and consultants of the Company’s affiliates.
Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the Omnibus Plan, 11,404,170 shares of Class A common stock (the “Share Reserve”) have been reserved for issuance pursuant to awards under the Omnibus Plan. The total number of shares reserved for issuance under the Omnibus Plan will be increased annually on January 1 of each calendar year beginning in 2027 and ending and including January 1, 2036, by the lesser of (i) 3 % of the aggregate number of shares of Class A common stock and Class B common stock, in each case, outstanding on December 31 of the immediately preceding calendar year and (ii) the number of shares of Class A common stock as is determined by the Company’s Board of Directors.
22
Table of Contents
Restricted Stock Units (RSUs)
Subsequent to the Organizational Transactions and the IPO, the Company granted RSUs under the Omnibus Plan to certain employees and non-employee directors. RSUs represent the right to receive shares of Class A common stock at specified future dates. RSUs are subject to a service-based vesting condition. The service condition for employees is generally satisfied over 3 years, whereby one-third of the RSUs vest on each anniversary of the grant date, subject to continued service through the applicable vesting date. The service condition for non-employee directors is generally satisfied on the day immediately prior to the date of the next annual meeting of shareholders, or, if earlier, the first anniversary of the grant date, subject to continued service through the applicable vesting date. During the three and nine months ended September 30, 2026, the Company granted 141,587 RSUs and 870,173 RSUs, respectively, with a weighted-average grant date fair value of $17.14 per share and $26.13 per share, respectively. As of September 30, 2026, unrecognized compensation cost related to the RSUs was $19.1 million, which is expected to be recognized over a weighted-average period of 2.6 years. During the three and nine months ended September 30, 2026, the Company recognized approximately $1.8 million and $2.8 million, respectively, of stock compensation expense related to the RSUs.
Performance-Based Restricted Stock Units (PSUs)
Subsequent to the Organizational Transactions and the IPO, the Company granted PSUs under the Omnibus Plan to certain employees. PSUs represent the right to receive shares of Class A common stock at specified future dates. PSUs are subject to a service-based vesting condition and performance conditions. The service condition is generally satisfied via continued service through the first quarter of 2029. The performance conditions are consolidated revenue and adjusted EBITDA targets for each of 2026, 2027 and 2028, as determined by the Board of Directors on an annual basis. The number of PSUs eligible to vest range from 50 % to 200 % of the number of PSUs granted, which is determined by whether the specified minimum, target or maximum revenue or adjusted EBITDA thresholds for each performance year are achieved. During the three and nine months ended September 30, 2026, the Company granted 6,442 PSUs and 274,985 PSUs, respectively, with a weighted-average grant date fair value of $17.44 per share and $27.54 per share, respectively. One-third of these PSUs will not be granted for accounting purposes (i.e., expense recognition) until the first quarter of 2027 when specified minimum, target and maximum revenue and adjusted EBITDA thresholds for 2027 have been determined by the Board of Directors, and one-third of these PSUs will not be granted for accounting purposes (i.e., expense recognition) until the first quarter of 2028 when specified minimum, target and maximum revenue and adjusted EBITDA thresholds for 2028 have been determined by the Board of Directors. As of September 30, 2026, unrecognized compensation cost related to the PSUs was $12.7 million, which is expected to be recognized over a weighted-average period of 2.3 years. During the three and nine months ended September 30, 2026, the Company recognized approximately $1.4 million and $2.1 million of stock compensation expense related to the PSUs.
NOTE 11. INCOME TAXES AND TAX RECEIVABLE AGREEMENT
The Company's sole material asset is its interest in Holdings LLC. Following the Organizational Transactions, the Company's allocable share of taxable income generated by Holdings LLC is subject to U.S. federal, state and local income taxes. A significant portion of Holdings LLC's income is allocated to noncontrolling interests and is not subject to income tax at the Company level. Accordingly, the Company's effective tax rate may differ materially from the statutory rate depending on the ownership percentage of the noncontrolling interests. Holdings LLC is treated as a partnership for U.S. federal income tax purposes and, as a result, generally is not subject to U.S. federal income tax, although it may be subject to certain state and local taxes. Income taxes attributable to Holdings LLC's operations are generally the responsibility of its members. However, certain wholly owned operating subsidiaries of Holdings LLC are treated as corporations and are subject to U.S. federal, state and local income taxes.
The provision for income taxes was $41.7 million and $44.2 million for the three and nine months ended September 30, 2026, respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2026 was 167.1 % and 80.2 %, respectively. For the three and nine months ended September 30, 2026, the Company’s effective income tax rate differed from the federal statutory rate of 21% primarily due to deferred tax expense recognized in connection with the BlackSea acquisition and related post-acquisition restructuring transactions, as well as the impact of income allocated to noncontrolling interests that is not subject to income tax at the Company level. The provision for income taxes was $40 thousand and $122 thousand for the three and nine months ended September 30, 2025, respectively, which represents income taxes for the Holdings LLC wholly owned operating subsidiaries taxed as C corporations.
23
Table of Contents
As a result of the Organizational Transactions, IPO, and the TRA, during the nine months ended September 30, 2026, the Company recognized an initial increase to its deferred tax assets (net of valuation allowance) in the amount of $43.5 million, a corresponding estimated TRA liability of $59.0 million, and a decrease in stockholders’ equity of $15.5 million.
As a result of the Secondary Offering, during the nine months ended September 30, 2026, the Company recognized an additional initial increase to its deferred tax assets (net of valuation allowance) in the amount of $42.5 million, a corresponding increase in the estimated TRA liability of $36.9 million, and an increase in stockholders’ equity of $5.6 million. The deferred tax assets relate to temporary differences between the book basis and tax basis of AEVEX Corp.'s interest in Holdings LLC, as well as expected future tax deductions resulting from estimated payments under the TRA. During the three and nine months ended September 30, 2026, the Company also recognized as other income a gain of $10.8
Under the terms of the LLC Operating Agreement and the TRA, Holdings LLC is obligated to make income tax distributions to the LLC Unitholders, including the Company. To the extent that Holdings LLC has available cash, the Company intends to cause Holdings LLC to make cash distributions to the LLC Unitholders, including the Company, in amounts sufficient to (1) fund all or part of their income tax obligations in respect of taxable income allocated to them and (2) cover the Company’s operating expenses, including payments under the TRA. During the three months ended September 30, 2026 and 2025, cash distributions to the LLC Unitholders were $0 3.0 million and $0 8.0 million.
NOTE 12. STOCKHOLDERS’ EQUITY / MEMBERS’ EQUITY
Stockholders’ Equity
Amendment and Restatement of Certificate of Incorporation
In connection with the Organizational Transactions, the Company amended and restated its certificate of incorporation to, among other things, provide for the authorization of (i) 1,000,000,000 shares of Class A common stock with a par value of $0.0001 per share, (ii) 200,000,000 shares of Class B common stock with a par value of $0.0001 per share, and (iii) 50,000,000 shares of preferred stock with a par value per share that may be established by the Board of Directors in the applicable certificate of designations.
Holders of shares of the Company’s Class A common stock and holders of shares of the Company’s Class B common stock are entitled to one
Holders of shares of the Company’s Class A common stock are entitled to receive dividends when and if declared by the Board of Directors. Holders of the Company’s Class B common stock do not have any right to receive dividends or to receive a distribution upon dissolution or liquidation or the sale of all or substantially all of the Company’s assets.
The Company’s amended and restated certificate of incorporation and the LLC Operating Agreement require that (1) the Company at all times maintain a ratio of one Series A unit of Holdings LLC owned by the Company for each share of Class A common stock issued by the Company (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities), and (2) Holdings LLC at all times maintain (i) a one -to-one ratio between the number of shares of Class A common stock issued by the Company and the number of Series A units owned by the Company and (ii) a one -to-one ratio between the number of shares of Class B common stock issued and outstanding and the number of Series B units owned by ATS Investment Holdings and their permitted transferees, collectively.
As of September 30, 2026, the Company has no shares of preferred stock outstanding.
24
Table of Contents
Exchange Rights of LLC Unitholder
In accordance with the Exchange Agreement, ATS Investment Holdings (or certain permitted transferees thereof) is entitled to exchange its Series B units for shares of the Company’s Class A common stock on a one -for-one basis or, at the Company’s election, for cash, from a substantially concurrent public offering or private sale (based on the price of the Company’s Class A common stock in such public offering or private sale). Simultaneously with the payment of cash or the issuance of shares of Class A common stock, as applicable, in connection with an exchange of Series B units pursuant to the terms of the Exchange Agreement, a number of shares of the Company’s Class B common stock registered in the name of ATS Investment Holdings will automatically be transferred to us and will be cancelled for no consideration on a one -for-one basis with the number of Series B units exchanged.
Organizational Transactions and IPO
The following is a summary of the equity transactions consummated in connection with the recapitalization of Holdings LLC and the issuance by the Company of shares of its Class A and Class B common stock:
•88,432,824 Holdings LLC Class A units were replaced on a one -for-one basis with 25,135,300 Series A units and 63,297,524 Series B units;
•certain LLC Unitholders contributed their 25,135,300 Series A units to the Company in exchange for 25,135,300 shares of Class A common stock;
•the Company issued 63,297,524 shares of Class B common stock to ATS Investment Holdings, on a one -to-one basis with the number of Series B units it owned, for $1.0 million;
•all Series A preferred units converted into 7,208,876 shares of Class A common stock at a conversion price based on 80 % of the IPO price (and 7,208,876 Series A units were issued to a wholly-owned subsidiary of AEVEX Corp.);
•the Company issued 18,400,000 shares of its Class A common stock in its IPO; and
•the Company used the net proceeds from the IPO to acquire 18,400,000 newly-issued Series A units in Holdings LLC.
Secondary Offering
On June 5, 2026, the Company completed the Secondary Offering of 8,000,000 shares of the Company’s Class A common stock, of which 5,726,157 shares were offered by the Company and 2,273,843 shares were offered by the selling securityholders. The Company used the net proceeds from the Secondary Offering to purchase 5,726,157 Series B units, together with an equivalent number of shares of Class B common stock from certain direct and indirect members of ATS Investment Holdings, including entities controlled by the Principal Stockholder. The Company did not receive any proceeds from the sale of the shares of Class A common stock offered by the selling securityholders. The Secondary Offering did not increase the Company’s total shares outstanding and did not lead to shareholder dilution.
BlackSea Acquisition
In connection with the closing of the BlackSea acquisition on September 8, 2026 (discussed in Note 4, Acquisition) and the issuance of 12,727,273 shares of the Company’s Class A common stock to the seller, Holdings LLC issued 12,727,273 Series A units to the Company.
Members’ Equity
25
Table of Contents
NOTE 13. MEZZANINE EQUITY
Redeemable Noncontrolling Interests
As of September 30, 2026, AEVEX Corp. held 69,197,606 Series A units representing a 54.6 % economic interest in Holdings LLC and ATS Investment Holdings held 57,571,367 Series B units representing a 45.4 % economic interest in Holdings LLC.
Series A Preferred Units
In December 2025, the Company entered into a Unit Purchase Agreement with two investors pursuant to which the Company issued 100,000 Series A preferred units for aggregate cash proceeds of $100.0 million. The transaction closed in December 2025.
Under the Limited Liability Agreement of Holdings LLC prior to the Organizational Transactions, the Series A preferred units accrued a preferred return at a rate of 5.0 % per annum through June 4, 2027, compounding annually. The preferred return was added to each holder’s Series A preferred capital and included in the unreturned Series A preferred capital balance. Holders of Series A preferred units had a liquidation and dividend preference over all other unitholders, until they received all accrued returns and return of the initial capital.
The Series A preferred units also provided holders with certain conversion rights. Upon the occurrence of a liquidity event, which includes a qualified public offering, the Series A preferred investors could elect to convert all outstanding Series A preferred units into Class A units at a conversion price determined by reference to 80 % of the fair market value of a Class A unit. In a liquidity event, the Series A preferred unitholders were not eligible to receive the preferred return, and the conversion shares were calculated by dividing any unreturned capital contributions by 80 % of the IPO price. The right to convert upon various liquidity events, including a qualified public offering, represents an embedded derivative required to be accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings.
Beginning on the fifth anniversary of issuance, the Series A preferred investors could have required the Company to redeem all outstanding Series A preferred units for cash at their liquidation value, subject to applicable legal and contractual restrictions (the “Investor Put Right”). The Series A preferred units were classified as mezzanine equity in the consolidated balance sheets because they were redeemable at the option of the holders, pursuant to the Investor Put Right. The $100.0 million fair value at issuance (net of $0.1 million of issuance costs) was allocated between the Series A preferred units and the derivative liability, with the net proceeds first allocated to the derivative at its estimated fair value of $20.0 million and the remainder of $79.9 million allocated to the Series A preferred units. As of December 31, 2025, the Company increased the carrying value of the Series A preferred units to $80.4 million, which represented their maximum redemption value ($1,000 per unit, plus the preferred return of $0.4 million for the year ended December 31, 2025), less the estimated initial fair value of the derivative liability.
During the three months ended March 31, 2026, the Company entered into two Unit Purchase Agreements with Radz Capital AEVEX Holdings Inc., pursuant to which the Company issued 15,342 Series A preferred units under the LLC Agreement for aggregate cash proceeds of $15.3 million. The transactions closed during the three months ended March 31, 2026. Mr. Raduenz, Executive Chairman of the Company, is the President of Radz Capital AEVEX Holdings Inc. The $15.3 million fair value at issuance (net of $25 thousand of issuance costs) was allocated between the Series A preferred units and the derivative liability, with the net proceeds first allocated to the derivative at its estimated fair value of $3.1 million and the remainder of $12.2 million allocated to the Series A preferred units.
As of March 31, 2026, the Company increased the carrying value of the 115,342 Series A preferred units to $93.9 million, which represents their maximum redemption value ($1,000 per unit, plus the preferred return of $1.7 million since issuance), less the estimated initial fair value of the derivative liability. During the three months ended March 31, 2026, the Company recognized preferred units accretion of $1.4 million as an increase in the carrying value of the Series A preferred units and a decrease in members’ equity. During the three months ended March 31, 2026, the Company recognized a $2.4 million increase in the estimated fair value of the derivative liability in the condensed consolidated statement of operations.
26
Table of Contents
In connection with the Organizational Transactions and the IPO, the 115,342 of Holdings LLC’s Series A preferred units outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80 % of the IPO price. As a result, as of April 16, 2026, the Company increased the carrying value of the 115,342 Series A preferred units to $94.2 million, which represents their maximum redemption value ($1,000 per unit, plus the preferred return of $2.0 million since issuance), less the estimated initial fair value of the derivative liability. During the three and nine months ended September 30, 2026, the Company recognized preferred units accretion of $0 and $1.6 million, respectively, as an increase in the carrying value of the Series A preferred units and a decrease in members’ equity. During the three and nine months ended September 30, 2026, the Company recognized a $0 and $5.7 million increase, respectively, in the estimated fair value of the derivative liability in the condensed consolidated statements of operations. Upon conversion, the Series A preferred units and the related derivative liability were reclassified to stockholders’ equity.
During the three and nine months ended September 30, 2026, the carrying value of the Series A preferred units was adjusted as follows (in thousands):
| Series A preferred units | |||||
Balance at December 31, 2025 | $ | ||||
Issuance of Series A preferred units | |||||
| Derivative liability at issuance | ( | ||||
| Series A preferred units accretion | |||||
| Balance at March 31, 2026 | |||||
| Series A preferred units accretion | |||||
| Derecognition | ( | ||||
| Balance at June 30, 2026 and September 30, 2026 | $ | ||||
27
Table of Contents
NOTE 14. EARNINGS PER SHARE
The following table sets forth the reconciliation of the numerator and denominator used to compute basic and diluted net loss per share of Class A common stock for the period following the Organizational Transactions (in thousands, except share and per share amounts):
| Three Months Ended September 30, 2026 | Period from April 17, 2026 to September 30, 2026 | |||||||||||||
| Numerator | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Less: Net income attributable to the noncontrolling interest | ( | ( | ||||||||||||
| Less: Net income attributable to the redeemable noncontrolling interests | ( | ( | ||||||||||||
| Net loss attributable to AEVEX Corp. - basic | ( | ( | ||||||||||||
| Add: Net income attributable to the redeemable noncontrolling interests | ||||||||||||||
| Net loss attributable to AEVEX Corp. - diluted | $ | ( | $ | ( | ||||||||||
| Denominator | ||||||||||||||
| Weighted-average Class A shares outstanding - basic | ||||||||||||||
| Dilutive effects of: | ||||||||||||||
| Unvested RSUs | ||||||||||||||
| Unvested PSUs | ||||||||||||||
| Series B units exchangeable for Class A common stock | ||||||||||||||
| Weighted-average Class A shares outstanding - diluted | ||||||||||||||
| Loss per share of Class A common stock - basic | $ | ( | $ | ( | ||||||||||
| Loss per share of Class A common stock - diluted | $ | ( | $ | ( | ||||||||||
Series B units, together with an equal number of shares of Class B common stock, may be exchanged, at the Company’s option, for shares of its Class A common stock or for cash. After evaluating the potential dilutive effect under the if-converted method, the assumed exchange of all outstanding Series B Units for shares of the Company’s Class A common stock was determined to be antidilutive and thus were excluded from the computation of diluted earnings per share. After evaluating the potential dilutive effect under the treasury stock method, the unvested RSUs of 841,103 and unvested PSUs of 268,534 were determined to be antidilutive and thus were excluded from the computation of diluted earnings per share. In addition, the Company excluded from the computation of diluted earnings per share 537,077 PSUs because they are not considered granted for accounting purposes.
NOTE 15. SEGMENT INFORMATION
The Company’s chief operating decision making officer (“CODM”) is the Company’s Chief Executive Officer. Consistent with how the Company evaluates its performance and the way it is organized internally, the Company reports its activities in three segments: (i) Airborne Systems, (ii) Maritime Systems, and (iii) Global Solutions. The segment information presented below conforms with these three reportable segments, which are organized based on the nature of the Company’s products and services offered. During the three months ended September 30, 2026, the Company’s CODM reevaluated how the Company measures performance and allocates resources, and modified the Company’s internal reporting, budgeting and forecasting and the responsibilities of his direct reports. As a result, the following changes were made to the Company’s reported segment information:
•The legacy Tactical Systems segment was renamed as Airborne Systems.
•The new Maritime Systems segment was created, which is comprised of the acquired BlackSea operations reported subsequent to the closing date and an immaterial portion of the legacy Tactical Systems segment.
•The Company revised the method of allocating certain costs (information technology, human resources and security) across segments from labor cost being the allocation driver to total cost being the allocation driver, in order to better align costs allocated to each segment with each segment’s estimated usage of the underlying services.
28
Table of Contents
The Airborne Systems segment primarily designs, develops, and manufactures autonomous systems and technologies, including Unmanned Aerial Systems (“UAS”), for defense and national security customers. The new Maritime Systems segment primarily designs, develops, and manufactures autonomous systems and technologies, including Unmanned Surface Vessels (“USV”) and Uncrewed Underwater Vehicles (“UUV”), for defense and national security customers.
As a result of these changes and consistent with the guidance in ASC 280, Segment Reporting, prior period disclosures of segment information have been recast to be comparable to the current period disclosures.
The CODM uses revenue and Segment Adjusted EBITDA to assess segment performance, to make decisions regarding the allocation of capital and other investments, and to monitor budget versus actual results. The CODM considers budget-to-actual variances on a quarterly basis for both revenue and Segment Adjusted EBITDA when making decisions about allocating capital and personnel to the segments and when assessing performance of the segments. Total segment expenses in the aggregate are regularly reported to the CODM and are comprised of cost of revenue, selling, general and administrative expenses, and R&D expenses, excluding depreciation expense. The CODM does not regularly review assets by segment. Therefore, the Company does not disclose assets by segment.
The Company defines Segment Adjusted EBITDA as net income (loss) before certain unallocated Corporate expenses, interest income and expense, income tax expense (benefit), depreciation and amortization expense, other income (expense), changes in the fair value of contingent consideration liabilities and derivative liabilities, noncash stock compensation expense, offering costs related to the IPO or Secondary Offering, asset impairments, business acquisition costs, restructuring costs, and gains or losses on debt extinguishments, as well as certain non-recurring items.
Financial information for each reportable segment is as follows for the three and nine months ended September 30, 2026:
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| Airborne Systems | Maritime Systems | Global Solutions | Total Segments | ||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | |||||||||||||||||||
| Total segment expenses | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | ||||||||||||||||||||
| Less unallocated amounts: | |||||||||||||||||||||||
Corporate(1) | ( | ||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Noncash stock compensation | ( | ||||||||||||||||||||||
| Business acquisition costs | ( | ||||||||||||||||||||||
Other(2) | ( | ||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||
(1) Corporate primarily consists of costs related to executive and staff functions, including the Chief Executive Officer, the Chief Operating Officer, Information Technology, Human Resources, Legal, Finance, Business Development, Corporate Development, and Administration, which benefit the enterprise as a whole.
(2) Other primarily includes $0.2 million of process improvement costs for the three months ended September 30, 2026.
29
Table of Contents
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||
| Airborne Systems | Maritime Systems | Global Solutions | Total Segments | ||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | |||||||||||||||||||
| Total segment expenses | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | ||||||||||||||||||||
| Less unallocated amounts: | |||||||||||||||||||||||
Corporate(1) | ( | ||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Change in fair value of derivative liability | ( | ||||||||||||||||||||||
| Noncash stock compensation | ( | ||||||||||||||||||||||
| IPO related costs | ( | ||||||||||||||||||||||
| Secondary Offering related costs | ( | ||||||||||||||||||||||
| Business acquisition costs | ( | ||||||||||||||||||||||
Other(2) | ( | ||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||
(1) Corporate primarily consists of costs related to executive and staff functions, including the Chief Executive Officer, the Chief Operating Officer, Information Technology, Human Resources, Legal, Finance, Business Development, Corporate Development, and Administration, which benefit the enterprise as a whole.
(2) Other primarily includes $0.5 million of process improvement costs for the nine months ended September 30, 2026.
Financial information for each reportable segment is as follows for the three and nine months ended September 30, 2025:
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| Airborne Systems | Maritime Systems | Global Solutions | Total Segments | ||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | |||||||||||||||||||
| Total segment expenses | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | $ | ||||||||||||||||||||
| Less unallocated amounts: | |||||||||||||||||||||||
Corporate(1) | ( | ||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
Other income, net(2) | |||||||||||||||||||||||
Other(3) | ( | ||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||
(1) Corporate primarily consists of costs related to executive and staff functions, including the Chief Executive Officer, the Chief Operating Officer, Information Technology, Human Resources, Legal, Finance, Business Development, Corporate Development, and Administration, which benefit the enterprise as a whole.
(2) Other income, net includes a $6.8 million gain related to a non-recurring Viking legal settlement for the three months ended September 30, 2025.
(3) Other primarily includes $0.7 million of legal expenses related to the non-recurring Viking legal settlement for the three months ended September 30, 2025.
30
Table of Contents
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Airborne Systems | Maritime Systems | Global Solutions | Total Segments | ||||||||||||||||||||
| Total segment revenue | $ | $ | $ | $ | |||||||||||||||||||
| Total segment expenses | |||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | $ | ( | $ | |||||||||||||||||||
| Less unallocated amounts: | |||||||||||||||||||||||
Corporate(1) | ( | ||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Change in contingent consideration | ( | ||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
Other income, net(2) | |||||||||||||||||||||||
Other(3) | ( | ||||||||||||||||||||||
| Loss before income taxes | $ | ( | |||||||||||||||||||||
(1) Corporate primarily consists of costs related to executive and staff functions, including the Chief Executive Officer, the Chief Operating Officer, Information Technology, Human Resources, Legal, Finance, Business Development, Corporate Development, and Administration, which benefit the enterprise as a whole.
(2) Other income, net includes a $6.8 million gain related to a non-recurring Viking legal settlement for the nine months ended September 30, 2025.
(3) Other primarily includes $1.6 million of legal expenses related to the non-recurring Viking legal settlement for the nine months ended September 30, 2025.
Substantially all of the Company’s long-lived tangible assets were in the United States as of September 30, 2026 and December 31, 2025.
31
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of our financial condition and results of operations together with the sections entitled “Forward-Looking Statements” and “Risk Factors” and the unaudited condensed consolidated financial statements and related notes of AEVEX Corp. included in this Quarterly Report on Form 10-Q, as well as the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and related notes thereto of AEVEX Corp. and Athena Technology Solutions Holdings, LLC (“Holdings LLC”) included in our final prospectus, dated April 16, 2026, filed with the SEC pursuant to Rule 424(b) under the Securities Act (the “IPO Prospectus”) in connection with our IPO.
This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Forward-Looking Statements” and in the “Risk Factors” sections of our most recent filings with the Securities and Exchange Commission. Our actual results may differ materially from those contained in or implied by these forward-looking statements.
Overview
We believe that we are a leading defense technology prime contractor and critical enabler of U.S. UAS dominance strategy missions. We are highly differentiated by our proven track record of securing and successfully executing on critical strategic Programs of Record. On September 8, 2026, we acquired all of the issued and outstanding shares of capital stock of BlackSea, which is one of the largest providers of unmanned surface and subsea vessels in the U.S. defense market. Today, we are positioned as a recognized global leader in UxS. Through our advanced autonomous, AI-enabled, and attritable UxS, we play a central role in defining next-generation warfighting capabilities, including key areas such as precision strike launched effects, loitering munitions, and full-scope ISR.
Following the acquisition of BlackSea, we deliver technology-led products and solutions through three complementary business segments:
•Airborne Systems: Designs and manufactures battle-tested, autonomous, modular, and attritable UxS, including UAS, along with other mission critical products. The legacy Tactical Systems segment was renamed Airborne Systems during September 2026 in connection with the BlackSea acquisition. Airborne Systems segment revenue represented approximately 77.9% and 73.0% of our revenue for the three months ended September 30, 2026 and 2025, respectively, and approximately 83.3% and 68.8% of our revenue for the nine months ended September 30, 2026 and 2025, respectively.
•Maritime Systems: Designs and manufactures battle-tested, autonomous, modular, and attritable UxS, including USV and UUV, along with other mission critical products. The new Maritime Systems segment was created during September 2026 and is comprised of the acquired BlackSea operations reported subsequent to the closing date and an immaterial portion of the legacy Tactical Systems segment. Maritime Systems segment revenue represented approximately 7.6% and 1.6% of our revenue for the three months ended September 30, 2026 and 2025, respectively, and approximately 3.4% and 0.8% of our revenue for the nine months ended September 30, 2026 and 2025, respectively.
•Global Solutions: Provides bespoke mission solutions, including AI-enabled full-spectrum airborne ISR, C-UAS, additive manufacturing, and specialized mission aircraft engineering, modification, and testing. Global Solutions segment revenue represented approximately 14.5% and 25.4% of our revenue for the three months ended September 30, 2026 and 2025, respectively, and approximately 13.3% and 30.4% of our revenue for the nine months ended September 30, 2026 and 2025, respectively.
20
Table of Contents
Recent Developments
Initial Public Offering and Organizational Transactions
On April 20, 2026, the Company consummated its IPO of 18,400,000 shares of its Class A common stock, which includes the exercise in full by the underwriters of their option to purchase an additional 2,400,000 shares of Class A common stock from us. The 18,400,000 shares were issued at a public offering price of $20.00 per share, resulting in net proceeds to the Company of $345.9 million, after deducting underwriting discounts and commissions of $22.1 million. In addition to the underwriting discounts and commissions, the Company incurred $13.8 million of total offering costs, which were recorded in additional paid-in capital during the three months ended June 30, 2026.
In connection with the IPO, the Company completed the Organizational Transactions described under Note 1, Organization, of the Company’s condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following is a summary of the equity transactions consummated in connection with the Organizational Transactions and the IPO:
•88,432,824 Holdings LLC Class A units were replaced on a one-for-on basis with 25,135,300 Series A units and 63,297,524 Series B units;
•certain LLC Unitholders contributed their 25,135,300 Series A units to the Company in exchange for 25,135,300 shares of Class A common stock;
•the Company issued 63,297,524 shares of Class B common stock to ATS Investment Holdings, on a one-to-one basis with the number of Series B units it owned, for $1.0 million;
•all Series A preferred units converted into 7,208,876 shares of Class A common stock at a conversion price based on 80% of the IPO price (and 7,208,876 Series A units were issued to a wholly-owned subsidiary of AEVEX Corp.);
•the Company issued 18,400,000 shares of its Class A common stock as a result of the IPO; and
•the Company used the net proceeds from the IPO to acquire 18,400,000 newly-issued Series A units in Holdings LLC.
The Company is a holding company whose sole material asset consists of membership interests in Holdings LLC. The Company is the managing member of Holdings LLC and controls and is responsible for all operational, management and administrative decisions relating to Holdings LLC’s business and consolidates the financial results of Holdings LLC and reports redeemable noncontrolling interests in its consolidated financial statements related to the Series B units that ATS Investment Holdings owns in Holdings LLC. The results of operations discussed in this Quarterly Report on Form 10-Q include those of Holdings LLC prior to the completion of the Organizational Transactions and those of AEVEX Corp., including Holdings LLC, following the completion of the Organizational Transactions. As a result, the unaudited condensed consolidated financial data may not represent an accurate indication of what our actual results would have been if the Organizational Transactions and IPO had been completed at the beginning of the periods presented or of what our future results of operations are likely to be.
Secondary Offering
On June 5, 2026, we completed our Secondary Offering of 8,000,000 shares of our Class A common stock, of which 5,726,157 shares were offered by us and 2,273,843 shares were offered by the selling securityholders, in each case at a price to the public of $27.00 per share. We used the net proceeds from this offering to purchase 5,726,157 Series B units, together with an equivalent number of shares of Class B common stock from certain direct and indirect members of ATS Investment Holdings, including entities controlled by the Principal Stockholder. We did not receive proceeds from the sale of the shares of Class A common stock offered by the selling securityholders. The Secondary Offering did not increase the Company’s total shares outstanding and did not lead to shareholder dilution.
Acquisition of BlackSea
On September 8, 2026, the Company acquired 100% of the equity interests of BlackSea Holdco, Inc., and indirectly of Maritime Applied Physics Corporation. The BlackSea acquisition was accounted for as a business combination.
21
Table of Contents
The fair value of the consideration transferred to the seller for the acquisition at closing included $279.3 million of cash (excluding acquired cash and cash equivalents of $39.4 million) and 12,727,273 shares of the Company’s Class A common stock with an acquisition date fair value of $217.8 million. The acquisition is subject to a post-closing purchase price adjustment of up to $5.0 million, which is currently held in escrow, based on BlackSea’s closing net working capital, cash, indebtedness and transaction expenses. As of September 30, 2026, the Company has recorded a preliminary estimated post-closing purchase price adjustment of $5.0 million as an increase to other current assets and a decrease to goodwill. The Company financed the cash portion of the purchase consideration with cash on hand and the $75.0 million borrowing from its senior secured Delayed Draw Term Loan Facility.
The seller may earn additional, contingent consideration of $50.0 million if, during the period from the closing date through December 31, 2027, (i) the 30-trading-day volume weighted average price of the Company’s Class A common stock equals or exceeds $28.00 per share during any 30 consecutive trading days in that period and (ii) BlackSea generates either (a) at least $24.8 million of revenue and $8.9 million of gross profit from specified autonomous vessel U.S. government contracts, or (b) at least $26.6 million of revenue and $9.6 million of gross profit from specified autonomous vessel U.S. government contracts. If earned, the $50.0 million will be paid in a variable number of shares (not to exceed 10,062,727 shares) of the Company’s Class A common stock based on the 30-trading-day volume weighted average price as of December 31, 2027. The estimated fair value of the contingent consideration liability was immaterial as of the acquisition closing date and as of September 30, 2026.
The results of operations of BlackSea have been included in the consolidated financial statements of the Company from September 8, 2026, the closing date of the acquisition.
In connection with the closing of the BlackSea acquisition on September 8, 2026 and the issuance of 12,727,273 shares of the Company’s Class A common stock to the Seller, Holdings LLC issued 12,727,273 Series A units to the Company. As of September 30, 2026, after giving effect to the Organizational Transactions, IPO, Secondary Offering and BlackSea acquisition, AEVEX Corp. held 69,197,606 Series A units representing a 54.6% economic interest in Holdings LLC and ATS Investment Holdings held 57,571,367 Series B units representing a 45.4% economic interest in Holdings LLC.
See Note 4, “Acquisition,” in our unaudited condensed consolidated financial statements and related notes thereto included herein for more information about the acquisition.
Key Factors Affecting Our Performance
Our results have been affected, and are expected to be affected in the future, by a variety of factors. A discussion of key factors that have had, or may have, an effect on our results is set forth below. Information regarding the Company’s risk factors appears under “Risk Factors” in our most recent filings with the Securities and Exchange Commission.
U.S. and Foreign Government Expenditures
U.S. and foreign government expenditures have fueled the growth in our target markets, and we expect the continued availability of U.S. and foreign government expenditures for our customers to help fund purchases of our products and services. However, changes in the volume and relative mix of U.S. and foreign government expenditures, as well as in areas of spending growth, may impact our results of operations. In particular, our results may be affected by shifts in strategies and priorities on defense-related programs. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government expenditures, as well as shifts in overall priorities, could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to maintain access and schedules for government testing or the deployment of our staff to customer locations or facilities as a result of such disruptions.
22
Table of Contents
There is also uncertainty around the timing, extent, nature and effect of Congressional and other U.S. Government actions to address budgetary constraints and caps on the discretionary budget for defense and non-defense departments and agencies. In addition, there is uncertainty around the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. Government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt may increase pressure on the U.S. Government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. Government budgets could delay procurement of the federal government services that we provide. During the nine months ended September 30, 2026, we experienced elongated award timelines in certain cases resulting from ongoing conflicts in the Middle East, changes to Department of Defense acquisition personnel and processes, and operational reprioritization. These dynamics may result in delays between opportunity identification and contract award, which could affect the timing of our revenue and backlog growth.
Macroeconomic Pressures
In recent years, geopolitical instability, including wars and conflicts, as well as impacts from other global events and heightened global tensions, have resulted in opportunities for companies in the defense technology market. Global defense spending is accelerating, fueled by rising budgets, modernization initiatives, and the urgent demand for next-generation advanced systems to counter near-peer adversaries. This surge has in part been driven by active conflicts in the Middle East, Africa, and Eastern Europe, along with the anticipation of future engagements in the South Pacific. While these conditions may create growth opportunities, the unpredictable nature, duration, and geographic scope of such conflicts introduce significant uncertainty regarding the sustainability of this demand. However, certain disruptions to the global economy, including market disruptions, monetary, and fiscal policy uncertainty, supply chain challenges, high interest rates and inflationary pressures have contributed to an inflationary environment that may adversely affect the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. In addition, the global trade environment is uncertain and evolving. Tariffs imposed by the U.S. presidential administration or retaliatory tariffs by other countries have resulted in an ongoing trade war. The impact of tariffs on our business and results of operations will depend on their timing, duration, and magnitude.
Project Revenue Mix and Impact on Margins
We may experience future variability in the profitability of our contracts, and such variability may occur at levels and frequencies different from variability we have historically experienced. Such variability in profitability may be due to strategic decisions, cost overruns, or other circumstances within or outside of our control. Accordingly, our historical experience with profitability of our contracts is not indicative or predictive of future experience.
Our financial success is based on our ability to deliver high quality products on a timely basis and at a cost-effective price for our customers. When agreeing to contractual terms, our management team makes assumptions and projections about future conditions and events. The accounting for our contracts and programs involves assumptions and estimates about these conditions and events. These projections and estimates assess:
•the productivity and availability of labor;
•the allocation of indirect costs to labor and material costs incurred;
•the complexity of the work to be performed;
•the cost and availability of materials and components; and
•schedule requirements.
If there is a significant change in one or more of these circumstances, estimates or assumptions, or if the risks under our contracts are not managed adequately, the profitability of contracts could be adversely affected, which could materially affect earnings and margins in any given fiscal period.
In particular, profitability can fluctuate depending on the type of contract award. Contracts with certain customers reflect firm fixed pricing structures. As a result, our gross profit is dependent on the efficient and effective execution of our contracts. Our ability to maximize gross profit may be impacted by, but not limited to, unanticipated cost overruns, disruptions in our supply chains, learning curve and non-recurring engineering costs related to our contracts with customers. If our fixed-price development efforts contribute to a larger portion of our revenue output, we may have a higher risk profile, which may result in reduced margins.
23
Table of Contents
From time to time, we may strategically enter into contracts with low or negative margins relative to other contracts or that are at risk of cost overruns. This may occur due to strategic decisions built around positioning ourselves for future contracts or to enhance our product and service offerings. However, in some instances, loss contracts may occur from unforeseen cost overruns that are not recoverable from the customer. We establish loss reserves on contracts in which the cost estimate-at-completion (“EAC”) exceeds the estimated revenue. The loss reserves are recorded in the period in which a loss is determined. Our reference to adjustments to EAC in the context of describing our results of operations includes net changes during the period in our aggregate program contract values, EAC and other program estimates, and includes the impact of cost overruns and recognition of loss reserves.
Additionally, the timing of our cash flows is impacted by the timing of achievement of billable milestones on contracts. Historically, this has resulted and could continue to result in fluctuations in working capital levels and quarterly free cash flow. As a result of such quarterly fluctuations in free cash flow, we believe that quarter-to-quarter comparisons of our results of operations may not necessarily be meaningful and should not be relied upon as indicators of future performance.
Ability to Continue to Innovate and Expand our Product and Service Offerings
To continue gaining market share and attracting customers, we plan to continue making substantial investments in R&D for the continued enhancements of our product and service offerings. Our future success is dependent on our continued ability to leverage our engineering and design capabilities to meet exact customer innovation needs and to proactively innovate to help win emerging programs. If we are unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, our products could lose market share, our revenue and profits could decline, and we could experience operating losses.
Public Company Expenses
We have incurred, and expect to continue to incur, certain non-recurring professional fees and other expenses as part of our transition to becoming a public company. As a public company, we are implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. In particular, we expect our accounting, legal and personnel-related expenses and directors’ and officers’ insurance costs to increase as we establish more comprehensive compliance and governance functions, establish, maintain and review internal controls over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and file periodic reports in accordance with SEC rules. Our financial statements following the IPO reflect the impact of these expenses.
Funded Backlog
Funded backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on funded contracts that have been awarded to us (net of any revenue already recognized as of the backlog date). We include the aggregate expected revenue from awarded contracts in our funded backlog upon the execution of a legally binding agreement (e.g., written contract or purchase order), even though our contracts include certain termination rights exercisable by our customers with advance notice. We exclude from funded backlog any unfunded contract options and at-risk work. Deferred revenue recognized on our consolidated balance sheets consists of payments and billings that we have received in excess of revenue that we have recognized. Because cash receipts from these contracts have not been recognized into revenue, they are included in our backlog calculation.
We view growth in funded backlog as a key measure of our future business prospects. We monitor our funded backlog because we believe it is a forward-looking indicator of potential sales that can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although funded backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total funded backlog and potential future revenue that never gets recognized.
| September 30, 2026 | December 31, 2025 | ||||||||||
| Funded backlog | $ | 444,318 | $ | 503,123 | |||||||
24
Table of Contents
Funded backlog includes both single and multi-year awards, and fluctuations in backlog are driven primarily by the timing of large program wins. The decrease of $58.8 million in funded backlog for the nine months ended September 30, 2026 was primarily due to revenue recognized for the EUCOM AOR Deep Strike program during the nine months ended September 30, 2026. The decrease was also influenced by an increase in shorter-cycle customer orders. We are experiencing a shift in customer ordering patterns toward shorter-cycle procurement, with customers increasingly placing orders for near-term delivery rather than multi-year programs of record. This trend resulted in a greater proportion of our revenue during the nine months ended September 30, 2026, being derived from orders received and shipped within the same fiscal year. We expect to convert approximately 91.2% of the total $444.3 million of funded backlog as of September 30, 2026 into revenue during the next 12 months.
In addition, our funded backlog is subject to meaningful customer concentration risk. As of September 30, 2026, approximately 95.9% of the total dollar value of our funded backlog related to the U.S. Government. For purposes of evaluating our funded backlog, we consider all U.S. Government entities to be one customer. Additionally, funded backlog that is originally funded through U.S. Government efforts is considered to be U.S. Government backlog even if the program is directly contracted through an intermediary.
Components of Results of Operations
Revenue – consists entirely of revenue from contracts with customers, net of sales discounts. Our revenue is derived from a combination of cost-plus contracts, fixed price contracts, and time and materials contracts for both U.S. Government and commercial and international deliverables. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We recognize revenue upon satisfying the performance obligations identified in the contract, which is achieved as services are rendered, upon completion of a service, or through the transfer of control of the promised good or service to the customer either at a point in time or over time. Our contracts can range from short-term periods of less than 12 months to multi-year obligations.
We perform work under contracts that broadly consist of fixed-price, cost-reimbursable, time-and-materials arrangements, or a combination of the three. Pricing is contractually based on specific negotiations with each customer. Advanced payments and billings for milestones in excess of revenues recognized are recorded as current and non-current deferred revenue in our consolidated balance sheets and recognized into revenue as we satisfy the underlying performance obligations.
For fixed-price contracts satisfied over time, progress is measured using a cost-to-cost method, which accurately reflects the transfer of control to the customer. This method assesses the extent of progress based on the ratio of costs incurred to date against the total estimated costs to complete the performance obligation. Estimating total costs to complete requires us to make informed estimates regarding subcontractor performance, material costs and availability, labor costs and productivity, as well as overhead expenses. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved, or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when contractual obligations are achieved.
Should the estimated total costs to be incurred on a contract surpass the anticipated total revenue, we recognize a provision for the entire loss on the contract in the period when the loss is identified. For further discussion of the critical judgments and estimates related to our revenue recognition policies, see “Critical Accounting Estimates.”
Cost of Revenue – consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontractor and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits, depreciation and amortization.
25
Table of Contents
Selling, General, and Administrative – consists primarily of personnel-related expenses for our sales, marketing, supply chain, finance, legal, human resources and administrative personnel, the costs of customer service, information technology, risk management and related insurance, travel, allocated overhead and other marketing, communications and administrative expenses, as well as acquisition-related costs. We also expect to further invest in our corporate infrastructure and incur additional expenses associated with operating as a public company, including increased legal and accounting costs, investor relations and compliance costs. As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time. In addition, as a result of becoming a public company, we will incur significant additional annual expenses including, among other things, additional directors’ and officers’ liability insurance, costs to administer a public company stock compensation plan, director fees, costs to comply with reporting requirements of the SEC, transfer agent fees, costs for additional accounting, legal and administrative personnel, increased auditing, tax and legal fees, stock exchange listing fees, additional stock compensation expense and similar expenses.
Research and Development – represents primarily employee and contractor compensation, supplies and materials for new product development and facility costs.
Amortization of Intangible Assets – represents customer relationships, customer contracts, technology, trade names and non-compete agreements acquired in business combinations that are not directly related to the delivery of our products or services and are amortized based on their pattern of economic benefit over their estimated useful lives.
Change in Contingent Consideration – As part of the acquisition of Tribe Aerospace, LLC in 2022, we agreed to pay contingent consideration to the sellers for any EBITDA (as defined in the earnout arrangement) recognized over certain thresholds during the earnout period from 2022-2024. The contingent consideration was settled using a combination of cash and Class A units based on converting a portion of each contingent payment to units at the fixed contractual price per unit. The change in fair value of the liability during the three and nine months ended September 30, 2025 represented accretion of the discounted liability outstanding during the periods. All Tribe Aerospace earnout arrangement liabilities were settled as of December 31, 2025.
Interest Expense – consists primarily of interest expense incurred on borrowings under our credit agreements.
Interest Income – consists primarily of interest income earned on cash and cash equivalents.
Change in Derivative Liability – During December 2025 and the three months ended March 31, 2026, the Company issued Series A preferred units with conversion features that represent an embedded derivative that is accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings. In connection with the IPO, the 115,342 of Holdings LLC’s Series A preferred units (and the related derivative liability) outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80% of the IPO price.
Other Income (Expense), net – reflects miscellaneous income and expense unrelated to our core business activities, including changes in our TRA liability.
Provision for Income Taxes – represents the provision for U.S. federal, state and local income taxes. For periods prior to the Organizational Transactions, this represents the provision for income taxes for only certain of the operating subsidiaries of the Company and Holdings LLC that are taxed as C corporations. Following the completion of the Organizational Transactions, the Company also became subject to U.S. federal, state, and local income taxes on its share of taxable income earned through its interest in Holdings LLC assessed at the applicable corporate income tax rates.
Net Income Attributable to Noncontrolling Interest – The Company was the primary beneficiary of a variable interest entity (“VIE”) and, as a result, included the VIE’s results of operations and financial position in the Company’s consolidated financial statements. The Company reports the VIE’s net income attributable to the VIE’s third-party equity holders as net income attributable to noncontrolling interest.
Net Income Attributable to Redeemable Noncontrolling Interests – represents the portion of Holdings LLC’s net income or loss that is attributable to ATS Investment Holdings, as holders of all of the Holdings LLC Series B units.
26
Table of Contents
Results of Operations
For the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
The following table sets forth our results of operations for the periods indicated (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
Products | $ | 148,107 | $ | 92,973 | $ | 55,134 | 59.3 | % | |||||||||||||||
Services | 41,590 | 28,262 | 13,328 | 47.2 | % | ||||||||||||||||||
Total revenue | 189,697 | 121,235 | 68,462 | 56.5 | % | ||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
Products | 103,566 | 68,509 | 35,057 | 51.2 | % | ||||||||||||||||||
Services | 31,454 | 22,404 | 9,050 | 40.4 | % | ||||||||||||||||||
Total cost of revenue | 135,020 | 90,913 | 44,107 | 48.5 | % | ||||||||||||||||||
| Gross profit | 54,677 | 30,322 | 24,355 | 80.3 | % | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general, and administrative | 29,314 | 8,261 | 21,053 | 254.8 | % | ||||||||||||||||||
Research and development | 7,205 | 6,351 | 854 | 13.4 | % | ||||||||||||||||||
Amortization of intangible assets | 5,254 | 4,188 | 1,066 | 25.5 | % | ||||||||||||||||||
| Total operating expenses | 41,773 | 18,800 | 22,973 | 122.2 | % | ||||||||||||||||||
Income from operations | 12,904 | 11,522 | 1,382 | 12.0 | % | ||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (2,659) | (8,573) | 5,914 | (69.0) | % | ||||||||||||||||||
Interest income | 1,603 | 142 | 1,461 | 1028.9 | % | ||||||||||||||||||
Other income, net | 13,113 | 6,840 | 6,273 | 91.7 | % | ||||||||||||||||||
Total other income (expense), net | 12,057 | (1,591) | 13,648 | (857.8) | % | ||||||||||||||||||
Income before income taxes | 24,961 | 9,931 | 15,030 | 151.3 | % | ||||||||||||||||||
| Provision for income taxes | 41,722 | 40 | 41,682 | 104205.0 | % | ||||||||||||||||||
Net (loss) income | (16,761) | 9,891 | (26,652) | (269.5) | % | ||||||||||||||||||
| Net income attributable to noncontrolling interest | 76 | 2 | 74 | 3700.0 | % | ||||||||||||||||||
Net income attributable to redeemable noncontrolling interests | 7,021 | — | 7,021 | 100.0 | % | ||||||||||||||||||
Net (loss) income attributable to AEVEX Corp. | $ | (23,858) | $ | 9,889 | $ | (33,747) | (341.3) | % | |||||||||||||||
Products Revenue
Products revenue increased to $148.1 million from $93.0 million, or by $55.1 million and 59.3%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to $55.3 million higher revenue in our Airborne Systems Segment and an increase of $5.3 million higher revenue in our Maritime Systems Segment driven from the recent acquisition of BlackSea. This is offset by $5.5 million lower revenue in our Global Solutions Segment.
Services Revenue
Services revenue increased to $41.6 million from $28.3 million, or by $13.3 million and 47.2%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to $7.1 million higher revenue in our Maritime Systems Segment driven from the recent acquisition of BlackSea, $4.0 million higher revenue in our Airborne Systems Segment, and $2.2 million higher revenue in our Global Solutions Segment.
27
Table of Contents
Cost of Products Revenue
Cost of products revenue increased to $103.6 million from $68.5 million, or by $35.1 million and 51.2%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to $34.5 million higher cost of revenue in our Airborne Systems Segment and an increase of $3.1 million higher cost of revenue in our Maritime Systems Segment driven from the recent BlackSea acquisition. This is offset by $2.5 million lower cost of revenue in our Global Solutions Segment.
Cost of Services Revenue
Cost of services revenue increased to $31.5 million from $22.4 million, or by $9.1 million and 40.4%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to $5.3 million higher cost of revenue in our Maritime Systems Segment from the recent acquisition of BlackSea and $3.8 million higher cost of revenue from our Airborne Systems Segment.
Gross Profit
Gross profit increased to $54.7 million from $30.3 million, or by $24.4 million and 80.3%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The gross profit percentage increased from 25.0% for the three months ended September 30, 2025 to 28.8% for the three months ended September 30, 2026.
Selling, General and Administrative
Selling, general, and administrative expenses increased to $29.3 million from $8.3 million, or by $21.0 million and 254.8%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to a $9.1 million increase in professional fees and other acquisition related costs for BlackSea and our investment in SOX controls, a $3.3 million increase in new employee-related costs, a $2.9 million increase in noncash stock compensation expense, a $2.2 million increase in incentive compensation expense, and a $0.8 million increase in G&A from our recent acquisition of BlackSea.
Research and Development
Research and development expenses increased to $7.2 million from $6.4 million, or by $0.8 million and 13.4%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to increase in development activities within the Airborne Systems segment.
Amortization of Intangible Assets
Amortization of intangible assets increased to $5.3 million from $4.2 million, or by $1.1 million and 25.5%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to a $1.0 million increase from the recent acquisition of BlackSea.
Interest Expense
Interest expense decreased to $2.7 million from $8.6 million, or by $5.9 million and 69.0%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily due to lower debt obligations outstanding and lower interest rates under the New Credit Facilities as compared to the Prior Credit Facilities.
Interest Income
Interest income increased to $1.6 million from $0.1 million, or by $1.5 million and 1028.9%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to interest earned on higher cash balances resulting from the net proceeds from the IPO.
28
Table of Contents
Other Income, Net
Other income, net increased to $13.1 million from $6.8 million, or by $6.3 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily attributable to a $10.8 million gain recognized from the remeasurement of the Company's TRA liability during the three months ended September 30, 2026. The remeasurement resulted from the acquisition and related restructuring transactions, which reduced the Company's estimated future payment obligations under the TRA. This is offset by $6.8 million gain related to a non-recurring Viking legal settlement during the three months ended September 30, 2025.
Provision for Income Taxes
The provision for income taxes increased to $41.7 million from $40 thousand, or by $41.7 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily attributable to a one-time deferred tax expense recognized in connection with the BlackSea acquisition and related post-acquisition restructuring transactions. In addition, following the completion of the Organizational Transactions, the Company became subject to U.S. federal, state and local income taxes on its allocable share of taxable income generated by Holdings LLC.
For the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
The following table sets forth our results of operations for the periods indicated (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
Products | $ | 508,619 | $ | 190,296 | $ | 318,323 | 167.3 | % | |||||||||||||||
Services | 99,562 | 85,331 | 14,231 | 16.7 | % | ||||||||||||||||||
Total revenue | 608,181 | 275,627 | 332,554 | 120.7 | % | ||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
Products | 374,043 | 151,384 | 222,659 | 147.1 | % | ||||||||||||||||||
Services | 75,320 | 72,483 | 2,837 | 3.9 | % | ||||||||||||||||||
Total cost of revenue | 449,363 | 223,867 | 225,496 | 100.7 | % | ||||||||||||||||||
| Gross profit | 158,818 | 51,760 | 107,058 | 206.8 | % | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general, and administrative | 71,195 | 26,232 | 44,963 | 171.4 | % | ||||||||||||||||||
Research and development | 16,181 | 23,035 | (6,854) | (29.8) | % | ||||||||||||||||||
Amortization of intangible assets | 13,544 | 12,393 | 1,151 | 9.3 | % | ||||||||||||||||||
Change in contingent consideration | — | 2,435 | (2,435) | (100.0) | % | ||||||||||||||||||
| Total operating expenses | 100,920 | 64,095 | 36,825 | 57.5 | % | ||||||||||||||||||
Income (loss) from operations | 57,898 | (12,335) | 70,233 | (569.4) | % | ||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (13,180) | (24,130) | 10,950 | (45.4) | % | ||||||||||||||||||
Interest income | 2,815 | 486 | 2,329 | 479.2 | % | ||||||||||||||||||
| Change in fair value of derivative liability | (5,695) | — | (5,695) | 100.0 | % | ||||||||||||||||||
Other income, net | 13,269 | 6,840 | 6,429 | 94.0 | % | ||||||||||||||||||
Total other expense, net | (2,791) | (16,804) | 14,013 | (83.4) | % | ||||||||||||||||||
Income (loss) before income taxes | 55,107 | (29,139) | 84,246 | (289.1) | % | ||||||||||||||||||
| Provision for income taxes | 44,176 | 122 | 44,054 | 36109.8 | % | ||||||||||||||||||
Net (loss) income | 10,931 | (29,261) | 40,192 | (137.4) | % | ||||||||||||||||||
| Net income attributable to noncontrolling interest | 224 | 23 | 201 | 873.9 | % | ||||||||||||||||||
Net income attributable to redeemable noncontrolling interests | 11,311 | — | 11,311 | 100.0 | % | ||||||||||||||||||
Net loss attributable to AEVEX Corp. | $ | (604) | $ | (29,284) | $ | 28,680 | (97.9) | % | |||||||||||||||
29
Table of Contents
Products Revenue
Products revenue increased to $508.6 million from $190.3 million, or by $318.3 million and 167.3%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to $310.0 million higher revenue in our Airborne Systems segment and an increase of $11.1 million higher revenue in our Maritime Systems segment from the recent acquisition of BlackSea. This is offset by $2.8 million lower revenue in our Global Solutions segment.
Services Revenue
Services revenue increased to $99.6 million from $85.3 million, or by $14.3 million and 16.7%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to $7.0 million higher revenue in our Airborne Systems segment and an increase of $7.2 million in our Maritime Systems segment from the recent acquisition of BlackSea.
Cost of Products Revenue
Cost of products revenue increased to $374.0 million from $151.4 million, or by $222.6 million and 147.1%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to $216.9 million higher cost of revenue in our Airborne Systems segment and an increase of $7.1 million higher cost of revenue in our Maritime Systems segment from the recent BlackSea acquisition. This is offset by $1.4 million lower cost of revenue in our Global Solutions segment.
Cost of Services Revenue
Cost of services revenue increased to $75.3 million from $72.5 million, or by $2.8 million and 3.9%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to $5.3 million higher cost of revenue from our Maritime Systems segment from our recent acquisition of BlackSea and $6.3 million higher cost of revenue from our Airborne Systems segment. This is offset by $8.8 million lower cost of revenue in our Global Solutions segment.
Gross Profit
Gross profit increased to $158.8 million from $51.8 million, or by $107.0 million and 206.8%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The gross profit percentage increased from 18.8% for the nine months ended September 30, 2025 to 26.1% for the nine months ended September 30, 2026.
Selling, General and Administrative
Selling, general, and administrative expenses increased to $71.2 million from $26.2 million, or by $45.0 million and 171.4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to a $20.1 million increase in professional fees and other acquisition related costs related to our IPO process, Secondary Offering, acquisition of BlackSea, and our investment in SOX controls, a $7.1 million increase in new employee-related costs, a $7.1 million increase in incentive compensation expense, a $4.5 million increase in noncash stock compensation expense, a $0.8 million increase in G&A from our recent acquisition of BlackSea, and a $1.1 million repurchase of Incentive Units.
Research and Development
Research and development expenses decreased to $16.2 million from $23.0 million, or by $6.8 million and 29.8%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to the decrease in development activities for the Airborne Systems segment.
Amortization of Intangible Assets
Amortization of intangible assets increased to $13.5 million from $12.4 million, or by $1.1 million and 9.3%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.The increase is primarily due to a $1.0 million increase from the recent acquisition of BlackSea.
30
Table of Contents
Change in Contingent Consideration
As part of the acquisition of Tribe Aerospace, LLC in 2022, the Company agreed to pay contingent consideration to the sellers for any EBITDA (as defined in the earnout arrangement) recognized over certain thresholds during the earnout period from 2022 to 2024. The contingent consideration was settled using a combination of cash and Class A units of Holdings LLC based on converting a portion of each contingent payment to units at the fixed contractual price per unit. The change in fair value of the liability during the nine months ended September 30, 2025 represents accretion of the discounted liability outstanding during the period. All Tribe Aerospace earnout arrangement liabilities were settled as of December 31, 2025.
Interest Expense
Interest expense decreased to $13.2 million from $24.1 million, or by $10.9 million and 45.4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to lower debt obligations outstanding and lower interest rates under the New Credit Facilities as compared to the Prior Credit Facilities, which was partially offset by the $0.9 million loss on debt extinguishment recognized during the nine months ended September 30, 2026.
Interest Income
Interest income increased to $2.8 million from $0.5 million, or by $2.3 million and 479.2%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to interest earned on higher cash balances resulting from the net proceeds from the IPO.
Change in Fair Value of Derivative Liability
During December 2025 and the three months ended March 31, 2026, the Company issued Series A preferred units with conversion features that represent an embedded derivative that is accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings for the nine months ended September 30, 2026.
Other Income, Net
Other income, net increased to $13.3 million from $6.8 million, or by $6.5 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily attributable to a $10.8 million gain recognized from the remeasurement of the Company's TRA liability resulting from the acquisition and related restructuring transactions, which reduced the Company's estimated future payment obligations under the TRA during the nine months ended September 30, 2026. This is offset by $6.8 million gain related to a non-recurring Viking legal settlement during the nine months ended September 30, 2025.
Provision for Income Taxes
The provision for income taxes increased to $44.2 million from $0.1 million, or by $44.1 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily attributable to deferred tax expense recognized in connection with the BlackSea acquisition and related post-acquisition restructuring transactions. In addition, following the completion of the Organizational Transactions, the Company became subject to U.S. federal, state and local income taxes on its allocable share of taxable income generated by Holdings LLC.
31
Table of Contents
Results by Segment
The Company reports its activities in three segments: (i) Airborne Systems, (ii) Maritime Systems, and (iii) Global Solutions. The segment information presented below conforms with these three reportable segments, which are organized based on the nature of the Company’s products and services offered. During the three months ended September 30, 2026, the Company made the following changes to the Company’s reported segment information:
•The legacy Tactical Systems segment was renamed as Airborne Systems.
•The new Maritime Systems segment was created, which is comprised of the acquired BlackSea operations reported subsequent to the closing date and an insignificant portion of the legacy Tactical Systems segment.
•The Company revised the method of allocating certain costs (information technology, human resources and security) across segments from labor cost being the allocation driver to total cost being the allocation driver, in order to better align costs allocated to each segment with each segment’s estimated usage of the underlying services.
The Airborne Systems segment primarily designs, develops, and manufactures autonomous systems and technologies, including UAS, for defense and national security customers. The Maritime Systems segment primarily designs, develops, and manufactures autonomous systems and technologies, including USV and UUV, for defense and national security customers.
As a result of these changes and consistent with the guidance in ASC 280, Segment Reporting, prior period disclosures of segment information have been recast to be comparable to the current period disclosures.
For the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
We measure the performance of our reportable segments based on total segment revenue and Segment Adjusted EBITDA. Our operating and reportable segments are Airborne Systems, Maritime Systems and Global Solutions. The following table presents total revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Airborne Systems | |||||||||||||||||||||||
| Segment revenue | $ | 147,788 | $ | 88,463 | $ | 59,325 | 67.1 | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 33,461 | $ | 15,253 | $ | 18,208 | 119.4 | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 22.6 | % | 17.2 | % | |||||||||||||||||||
| Maritime Systems | |||||||||||||||||||||||
| Segment revenue | $ | 14,435 | $ | 1,996 | $ | 12,439 | 623.2 | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 2,028 | $ | 318 | $ | 1,710 | 537.7 | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 14.0 | % | 15.9 | % | |||||||||||||||||||
| Global Solutions | |||||||||||||||||||||||
| Segment revenue | $ | 27,474 | $ | 30,776 | $ | (3,302) | (10.7) | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 1,495 | $ | 4,410 | $ | (2,915) | (66.1) | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 5.4 | % | 14.3 | % | |||||||||||||||||||
For a discussion of Segment Adjusted EBITDA, please refer to Item 1. Financial Statements, Note 15, “Segment Information” of the notes to the condensed consolidated financial statements.
Airborne Systems
Airborne Systems segment revenue increased to $147.8 million from $88.5 million, or by $59.3 million and 67.1%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to higher revenue from UAS products and support services.
32
Table of Contents
Airborne Systems Adjusted EBITDA increased to $33.5 million from $15.3 million, or by $18.2 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is primarily due to the increase in products revenue and the decrease in research and development expense for UAS products and services discussed above, which is offset by the increase in cost of products revenue and the increase in selling, general and administrative expenses for incentive compensation expense and new employee-related costs discussed above.
Maritime Systems
Maritime Systems segment revenue increased to $14.4 million from $2.0 million, or by $12.4 million and 623.2%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is due to the acquisition of BlackSea on September 8, 2026.
Maritime Systems Adjusted EBITDA increased to $2.0 million from $0.3 million, or by $1.7 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase is due to the acquisition of BlackSea on September 8, 2026.
Global Solutions
Global Solutions segment revenue decreased to $27.5 million from $30.8 million, or by $3.3 million and 10.7%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease is due to lower revenue primarily from aircraft modifications and testing products.
Global Solutions Adjusted EBITDA decreased to $1.5 million from $4.4 million, or by $2.9 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease is primarily due to lower gross profit from aircraft modifications and higher selling, general, and administrative expenses.
33
Table of Contents
For the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
We measure the performance of our reportable segments based on total segment revenue and Segment Adjusted EBITDA. Our operating and reportable segments are Airborne Systems, Maritime Systems and Global Solutions. The following table presents total revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Airborne Systems | |||||||||||||||||||||||
| Segment revenue | $ | 506,640 | $ | 189,704 | $ | 316,936 | 167.1 | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 98,349 | $ | 8,409 | $ | 89,940 | 1069.6 | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 19.4 | % | 4.4 | % | |||||||||||||||||||
| Maritime Systems | |||||||||||||||||||||||
| Segment revenue | $ | 20,600 | $ | 2,306 | $ | 18,294 | 793.3 | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 3,831 | $ | (334) | $ | 4,165 | (1247.0) | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 18.6 | % | (14.5) | % | |||||||||||||||||||
| Global Solutions | |||||||||||||||||||||||
| Segment revenue | $ | 80,941 | $ | 83,617 | $ | (2,676) | (3.2) | % | |||||||||||||||
| Segment Adjusted EBITDA | $ | 10,991 | $ | 5,028 | $ | 5,963 | 118.6 | % | |||||||||||||||
| Segment Adjusted EBITDA Margin | 13.6 | % | 6.0 | % | |||||||||||||||||||
For a discussion of Segment Adjusted EBITDA, please refer to Item 1. Financial Statements, Note 15, “Segment Information” of the notes to the condensed consolidated financial statements.
Airborne Systems
Airborne Systems segment revenue increased to $506.6 million from $189.7 million, or by $316.9 million and 167.1%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to higher revenue from UAS products and support services.
Airborne Systems Adjusted EBITDA increased to $98.3 million from $8.4 million, or by $89.9 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to the increase in products revenue and the decrease in research and development expense for UAS products and services discussed above, which is offset by the increase in cost of products revenue and the increase in selling, general and administrative expenses for incentive compensation expense and new employee-related costs discussed above.
Maritime Systems
Maritime Systems segment revenue increased to $20.6 million from $2.3 million, or by $18.3 million and 793.3%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is due to the acquisition of BlackSea on September 8, 2026 and increase in USV product revenue.
Maritime Systems Adjusted EBITDA increased to $3.8 million from $(0.3) million, or by $4.1 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is due to the acquisition of BlackSea on September 8, 2026 and a decrease in research and development expenses.
Global Solutions
Global Solutions segment revenue decreased to $80.9 million from $83.6 million, or by $2.7 million and 3.2%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease is primarily due to lower revenue from aircraft modifications products and services.
34
Table of Contents
Global Solutions Adjusted EBITDA increased to $11.0 million from $5.0 million, or by $6.0 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase is primarily due to higher gross profit from aircraft modification and testing products and services and mission support, intelligence, surveillance, and reconnaissance services and lower research and development expenses.
Non-GAAP Financial Measures
We use certain non-GAAP key performance indicators to evaluate our business operations, including Adjusted EBITDA, Adjusted EBITDA Margin and free cash flow.
The non-GAAP financial measures presented in this Quarterly Report on Form 10-Q 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 these non-GAAP financial measures provide investors with greater transparency to the information used by management for its operational decision-making. We further 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 a 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.
Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.
35
Table of Contents
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net income (loss) before interest income and expense, income tax expense (benefit), depreciation and amortization expense, other income (expense), changes in the fair value of contingent consideration liabilities and derivative liabilities, noncash stock compensation expense, offering costs related to the IPO or Secondary Offering, asset impairments, business acquisition costs, restructuring costs, and gains or losses on debt extinguishments, as well as certain non-recurring items. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important metrics for management and investors as they remove the impact of items that we do not believe are indicative of our core operating results or the overall health of our company and allow for consistent comparison of our operating results over time and relative to our peers.
The following table presents a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA Margin for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net (loss) income | $ | (16,761) | $ | 9,891 | $ | 10,931 | $ | (29,261) | |||||||||||||||
| Interest expense | 2,659 | 8,573 | 13,180 | 24,130 | |||||||||||||||||||
| Interest income | (1,603) | (142) | (2,815) | (486) | |||||||||||||||||||
| Provision for income taxes | 41,722 | 40 | 44,176 | 122 | |||||||||||||||||||
| Depreciation and amortization | 7,099 | 5,356 | 17,886 | 16,027 | |||||||||||||||||||
| Other income, net | (13,113) | (6,840) | (13,269) | (6,840) | |||||||||||||||||||
| Change in contingent consideration | — | — | — | 2,435 | |||||||||||||||||||
| Change in fair value of derivative liability | — | — | 5,695 | — | |||||||||||||||||||
| Noncash stock compensation | 3,134 | — | 4,865 | — | |||||||||||||||||||
IPO-related costs(1) | — | — | 1,475 | — | |||||||||||||||||||
Secondary Offering related costs(2) | — | — | 2,967 | — | |||||||||||||||||||
| Business acquisition costs | 7,445 | — | 9,713 | — | |||||||||||||||||||
Other(3) | 200 | 877 | 533 | 1,896 | |||||||||||||||||||
| Adjusted EBITDA | $ | 30,782 | $ | 17,755 | $ | 95,337 | $ | 8,023 | |||||||||||||||
| Total revenue | $ | 189,697 | $ | 121,235 | $ | 608,181 | $ | 275,627 | |||||||||||||||
| Net (loss) income margin | (8.8) | % | 8.2 | % | 1.8 | % | (10.6) | % | |||||||||||||||
| Adjusted EBITDA Margin | 16.2 | % | 14.6 | % | 15.7 | % | 2.9 | % | |||||||||||||||
(1) Represents non-recurring professional service fees related to the initial public offering and IPO readiness. | |||||||||||||||||||||||
(2) Represents non-recurring professional service fees related to the Secondary Offering. | |||||||||||||||||||||||
(3) Other for the three and nine months ended September 30, 2026 includes $0.2 million and $0.5 million, respectively, of process improvement costs. Other for the three and nine months ended September 30, 2025 primarily includes $0.7 million and $1.6 million, respectively, of legal fees related to the non-recurring Viking legal settlement. | |||||||||||||||||||||||
Liquidity and Capital Resources
We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations, debt service, acquisitions, and other commitments. Our principal sources of liquidity to date have included cash provided by operating activities, amounts raised through issuances of equity capital, including the IPO, and borrowings under our credit agreements. We currently expect that our principal future sources of funding will include our current cash balance, cash provided by operating activities, our New Credit Agreement and proceeds from other forms of debt financing and equity offerings.
36
Table of Contents
On April 20, 2026, we completed our IPO of 18,400,000 shares of our Class A common stock at a price of $20.00 per share, resulting in net cash proceeds of $345.9 million, after deducting underwriting discounts and commissions. In addition, on April 20, 2026, subsidiaries of Holdings LLC refinanced the Prior Credit Facilities and entered into the New Credit Facilities. Holdings LLC used the $100.0 million proceeds from the New Term Loan Facility and the proceeds it received from AEVEX Corp. for the purchase of newly issued Series A units (i) to repay approximately $258.5 million of outstanding borrowings under our Prior Credit Facilities, (ii) to pay $3.3 million of expenses incurred in connection with the refinancing, (iii) to pay $8.3 million of expenses incurred with the IPO and Organizational Transactions and (iv) for general corporate purposes.
After the consummation of the IPO, AEVEX Corp. is a holding company and has no material assets other than its ownership of equity interests in Holdings LLC. AEVEX Corp. will have no independent means of generating revenue or cash flow. Under the terms of the LLC Operating Agreement and the Tax Receivable Agreement (“TRA”), Holdings LLC is obligated to make tax distributions to the LLC Unitholders, including us. To the extent that Holdings LLC has available cash, we intend to cause Holdings LLC to make cash distributions to the LLC Unitholders, including us, in amounts sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them and (2) cover our operating expenses, including payments under the Tax Receivable Agreement.
The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges by ATS Investment Holdings (or certain permitted transferees thereof), the amount of gain recognized by ATS Investment Holdings (or certain permitted transferees thereof), the amount and timing of the taxable income we generate in the future and the federal tax rates then applicable. However, we expect that the payments AEVEX Corp. will be required to make under the TRA will be substantial and could materially affect our liquidity.
As a result of the Organizational Transactions, IPO, and the TRA, during the nine months ended September 30, 2026, the Company recognized an initial increase to its deferred tax assets (net of valuation allowance) in the amount of $43.5 million and a corresponding estimated TRA liability of $59.0 million. As a result of the Secondary Offering, during the nine months ended September 30, 2026, the Company recognized an additional initial increase to its deferred tax assets (net of valuation allowance) in the amount of $42.5 million and a corresponding increase in the estimated TRA liability of $36.9 million. The deferred tax assets are due to the tax effects of temporary differences in the book basis as compared to the tax basis of AEVEX Corp.’s interest in Holdings LLC, as well as expected future tax deductions as a result of estimated payments under the TRA. During the three and nine months ended September 30, 2026, the Company also recognized a $10.8 million gain in other income due to the remeasurement of the TRA liability resulting from the acquisition of BlackSea and related restructuring transactions, which reduced the Company's estimated future obligations under the TRA. As of September 30, 2026, the total estimated amount due under the TRA was $85.1 million, and the Company has not been required to make a payment under the TRA.
During the three months ended September 30, 2026 and 2025, cash distributions to the LLC Unitholders were $0. During the nine months ended September 30, 2026 and 2025, cash distributions to the LLC Unitholders (excluding the Company) to fund income tax obligations were $3.0 million and $0, respectively. Further, subsequent to September 30, 2026 and prior to the filing of this Quarterly Report on Form 10-Q, cash distributions to the LLC Unitholders (excluding the Company) to fund income tax obligations were $8.0 million.
There can be no assurance that Holdings LLC and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in debt instruments of Holdings LLC and its subsidiaries, will permit such distributions. Any payments made by us under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to use and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us. If AEVEX Corp. does not have sufficient funds to pay taxes, payments under the TRA or other liabilities or to fund its operations, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject it to various restrictions imposed by any such lenders.
In addition to payments required by the TRA, our expected primary uses of cash on a short and long-term basis are for potential acquisitions, working capital requirements, capital expenditures, R&D, debt service requirements, and other general corporate purposes. Our primary working capital requirements are for project execution activities including purchases of materials, subcontracted services and payroll, which fluctuate during the year, driven primarily by the timing and extent of activities required on new and existing projects.
37
Table of Contents
Our ability to generate sufficient liquidity from our ongoing operations and debt financing and capital markets transactions in order to meet our obligations and operating needs will enable us to continue our business operations. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and/or may be unable to advance growth initiatives, either of which could adversely impact our business, financial condition, and results of operations.
We believe that our cash and cash equivalents, cash provided by our operations, and amounts available under our New Credit Agreement will be adequate to meet our liquidity requirements for at least the next 12 months. Our future long-term capital requirements will depend on several factors, including our ability to raise additional capital and, over time, our ability to generate positive cash flows from operations. Accordingly, we may try to raise additional capital, whether in the public or private markets. We intend to use cash and cash equivalents and borrowings under our New Credit Agreement to fund our future activities. To the extent those funds are not sufficient, we may seek to raise additional funds through equity, equity-linked or debt financings. We may enter into agreements or letters of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, which could also require us to seek additional equity financing, incur indebtedness or use cash resources.
The following table summarizes select financial data relevant to our liquidity and capital resources as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Cash and cash equivalents | $ | 78,643 | $ | 27,908 | |||||||
| Total debt maturities (including current portion) | 173,906 | 259,135 | |||||||||
New Credit Facilities
On April 20, 2026, we entered into the New Credit Agreement that provides for facilities in an aggregate principal amount of $375.0 million, consisting of (i) a senior secured Term Loan Facility with an aggregate principal amount of $100.0 million, (ii) a senior secured Delayed Draw Term Loan Facility with an aggregate principal amount of $75.0 million and (iii) a senior secured Revolving Credit Facility with an aggregate principal amount of $200.0 million, which includes a sublimit for the issuance of letters of credit in an amount up to $40.0 million and a sublimit for swing line loans in an amount up to $30.0 million. As of the closing of the Company’s IPO, the aggregate principal amount borrowed under the New Credit Facilities is $100.0 million from the Term Loan Facility. Borrowings under the New Revolving Credit Facility and the New Delayed Draw Term Loan Facility may vary significantly from time to time depending on our cash needs at any given time. The New Revolving Credit Facility was undrawn at the closing of the IPO and as of September 30, 2026, and the Delayed Draw Term Loan Facility was not drawn at the closing of the IPO but was fully drawn as of September 30, 2026 as a result of the BlackSea acquisition.
The New Credit Agreement is guaranteed by certain of the Borrower’s wholly-owned domestic subsidiaries and secured by substantially all of the Borrower’s assets and the assets of certain of the Borrower’s subsidiaries, in each case, subject to customary exceptions.
The New Credit Agreement contains certain affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens on assets, fundamental changes and asset sales, investments, negative pledges, repurchase of stock, dividends and other distributions, and transactions with affiliates. In addition, the New Credit Agreement contains financial covenants that require the Loan Parties (as defined in the New Credit Agreement) to comply with the following financial covenants (subject to certain equity cure rights):
•Commencing with the fiscal quarter ending September 30, 2026, maintain a maximum total net leverage ratio not to exceed 3.50 to 1.00 (provided that (a) after June 30, 2029, the total net leverage ratio shall not exceed 3.00 to 1.00 for any test period and (b) the maximum total net leverage ratio shall temporarily increase by 0.50 during the four fiscal quarters following the consummation of a material acquisition), in each case, tested as of the last day of each fiscal quarter; and
•Commencing with the fiscal quarter ending September 30, 2026, maintain a minimum interest coverage ratio for any period, of not less than 3.00 to 1.00, tested as of the last day of each fiscal quarter.
38
Table of Contents
The New Credit Facilities mature on April 20, 2031. Borrowings under the New Credit Agreement are available, at the Borrower’s option, as term SOFR loans or base rate loans. Term SOFR loans under the New Credit Agreement accrue interest at a SOFR rate plus an applicable rate of 2.25% to 3.00% (depending on the secured net leverage ratio of the Borrower and its restricted subsidiaries). Base rate loans under the New Credit Agreement accrue interest at a base rate plus an applicable rate of 1.25% to 2.00% (depending on the secured net leverage ratio of the Borrower and its restricted subsidiaries). The Revolving Credit Facility also has a variable commitment fee, which is tied to the secured net leverage ratio of the Borrower and its restricted subsidiaries, which ranges from 0.25% to 0.50% per annum. As of September 30, 2026, the interest rate was 6.46% for the term SOFR loans.
The Revolving Credit Facility does not amortize. The Term Loan Facility and the Delayed Draw Term Loan Facility amortize in equal quarterly installments, commencing on September 30, 2026, in aggregate annual amounts according to the following amortization schedule:
Payment Dates | Annual Amortization Amount (percent of principal) | ||||
Year 1 | 2.5 | % | |||
Year 2 | 2.5 | % | |||
Year 3 | 7.5 | % | |||
Year 4 | 7.5 | % | |||
Year 5 | 10.0 | % | |||
Prior Credit Facilities
On March 18, 2020, we entered into a Credit Agreement (as amended by Amendment No. 1 to Credit Agreement, dated as of October 28, 2020, Amendment No. 2 to Credit Agreement, dated as of May 7, 2021, Amendment No. 3 to Credit Agreement, dated as of May 15, 2023, Amendment No. 4 to Credit Agreement, dated as of April 30, 2024 and Amendment No. 5 to Credit Agreement, dated as of September 15, 2025, the “Credit Agreement”) with a syndicate of lenders, Ankura Trust Company, LLC, as administrative agent and PNC Bank, National Association as revolving agent and collateral agent.
The Credit Agreement provided for a senior secured term loan facility (the “Term Loan”) in an original aggregate principal amount of $325.0 million. The Credit Agreement also provided for a super priority senior secured revolving credit facility in an aggregate principal amount of $25.0 million (the “Revolving Credit Facility” and, together with the Term Loan, the “Credit Facilities”). The Revolving Credit Facility included a $5.0 million sublimit for the issuance of letters of credit. The borrowings were guaranteed and secured by substantially all our assets and our subsidiaries.
The Term Loans bore interest at a rate equal to (i) 5.00% plus the base rate equal to the highest of (w) the prime rate, (x) the Federal funds open rate plus 0.50% per annum and (y) a daily Term SOFR rate based on an interest period of one month plus 1.00% per annum or (ii) Term SOFR plus 6.00% per annum subject to a 1.00% Term SOFR floor. The Revolving Credit Facility bore interest at a rate as set forth in the Credit Agreement.
In addition to paying interest on loans outstanding under the Term Loan and the Revolving Credit Facility, we were required to pay a commitment fee of 0.50% per annum of unused commitments under the Revolving Credit Facility. We were required to pay customary fronting, issuance, and administrative fees for the issuance of letters of credit.
Loan Authorization Agreement
On October 9, 2025, a wholly owned subsidiary of the Company entered into a Loan Authorization Agreement with the Bank of Montreal from which the Company could from time to time request loans and letters of credit in an aggregate principal amount of $60.0 million. Immediately following the closing of the IPO on April 20, 2026, the Loan Authorization Agreement was terminated effective April 21, 2026.
Series A Preferred Units
In December 2025, the Company entered into a Unit Purchase Agreement with two investors pursuant to which the Company issued 100,000 Series A preferred units for aggregate cash proceeds of $100.0 million. The transaction closed in December 2025.
39
Table of Contents
Under the LLC Agreement, the Series A preferred units initially accrued a preferred return at a rate of 5.0% per annum through June 4, 2027, compounding annually. The preferred return was added to each holder’s unreturned Series A preferred capital balance. Holders of Series A preferred units had a liquidation and dividend preference over all other unitholders, until receipt of all accrued returns and return of the initial capital.
The Series A preferred units also provided holders with certain conversion rights. Except as specifically provided in the LLC Agreement, the Series A preferred units did not confer general voting rights. Series A preferred unit holders were entitled to certain customary rights and subject to certain customary obligations as a member of the Company as set forth in the LLC Agreement.
The Series A preferred units were classified as mezzanine equity in the consolidated balance sheets because they were redeemable at the option of the holders. The $100.0 million fair value at issuance (net of $0.1 million of issuance costs) was allocated between the Series A preferred units and the embedded derivative, with the net proceeds first allocated to the derivative at its estimated fair value of $20.0 million and the remainder of $79.9 million allocated to the Series A preferred units. As of December 31, 2025, the Company increased the carrying value of the Series A preferred units to $80.4 million, which represents their maximum redemption value ($1,000 per unit, plus the preferred return of $0.4 million for the year ended December 31, 2025), less the estimated initial fair value of the embedded derivative.
During the three months ended March 31, 2026, the Company entered into two Unit Purchase Agreements with Radz Capital AEVEX Holdings Inc., pursuant to which the Company issued 15,342 Series A preferred units under the LLC Operating Agreement for aggregate cash proceeds of $15.3 million. The transactions closed during the three months ended March 31, 2026. Mr. Raduenz, Executive Chairman of the Company, is the President of Radz Capital AEVEX Holdings Inc. The $15.3 million fair value at issuance (net of $25 thousand of issuance costs) was allocated between the Series A preferred units and the derivative liability, with the net proceeds first allocated to the derivative at its estimated fair value of $3.1 million and the remainder of $12.2 million allocated to the Series A preferred units.
As of March 31, 2026, the Company increased the carrying value of the 115,342 Series A preferred units to $93.9 million, which represents their maximum redemption value ($1,000 per unit, plus the preferred return of $1.7 million since issuance), less the estimated initial fair value of the derivative liability. During the three months ended March 31, 2026, the Company recognized preferred units accretion of $1.4 million as an increase in the carrying value of the Series A preferred units and a decrease in members’ equity. During the three months ended March 31, 2026, the Company recognized a $2.4 million increase in the estimated fair value of the derivative liability in the condensed consolidated statement of operations.
In connection with the Organizational Transactions and the IPO, the 115,342 of Holdings LLC’s Series A preferred units outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80% of the IPO price. As a result, as of April 16, 2026, the Company increased the carrying value of the 115,342 Series A preferred units to $94.2 million, which represents their maximum redemption value ($1,000 per unit, plus the preferred return of $2.0 million since issuance), less the estimated initial fair value of the derivative liability. During the three and nine months ended September 30, 2026, the Company recognized preferred units accretion of $0 and $1.6 million, respectively, as an increase in the carrying value of the Series A preferred units and a decrease in members’ equity. During the three and nine months ended September 30, 2026, the Company recognized a $0 and $5.7 million increase, respectively, in the estimated fair value of the derivative liability in the condensed consolidated statements of operations. Upon conversion, the Series A preferred units and the related derivative liability were reclassified to stockholders’ equity.
Cash Flow Activity
The following table summarizes our cash flows for the periods indicated (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Net cash provided by (used in) operating activities | $ | 40,773 | $ | (14,060) | |||||||
Net cash used in investing activities | (246,470) | (9,317) | |||||||||
Net cash provided by financing activities | 256,829 | 7,446 | |||||||||
40
Table of Contents
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 was $40.8 million, compared to net cash used in operating activities of $14.1 million for the nine months ended September 30, 2025. The $54.9 million favorable change in cash flow from operations was primarily due to the $83.4 million increase in net income, net of non-cash items, partially offset by the $36.4 million increase in net operating assets during the nine months ended September 30, 2026 versus the $7.9 million increase in net operating assets during the nine months ended September 30, 2025. The $36.4 million increase in net operating assets during the nine months ended September 30, 2026 is primarily due to the timing of our cash payments to fulfill our customer contracts versus the timing of cash receipts from the customers, combined with an overall increase in revenue during the nine months ended September 30, 2026 versus the nine months ended September 30, 2025.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 increased by $237.2 million to $246.5 million, compared to $9.3 million for the nine months ended September 30, 2025. The increase in net cash used in investing activities was primarily due to a $238.2 million increase in business acquisition-related payments as a result of the BlackSea acquisition during the nine months ended September 30, 2026, which is offset by the $1.0 million in acquisition of long-lived assets during the nine months ended September 30, 2025.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2026 was $256.8 million, as compared to net cash provided by financing activities of $7.4 million for the nine months ended September 30, 2025. The change in financing cash flows was primarily due to the following activities during the nine months ended September 30, 2026: (i) the IPO net proceeds of approximately $345.9 million, (ii) the $173.1 million net proceeds from the new Term Loan Facility and (iii) the Series A preferred units net proceeds of $15.3 million, partially offset by (i) the payment of approximately $258.5 million of outstanding borrowings under the Prior Credit Facilities, (ii) the $12.3 million payments of IPO costs, and (iii) $3.0 million of distributions to members.
Free Cash Flow
We consider free cash flow to be a useful, supplemental measure of our ability to generate cash on a normalized basis. We use free cash flow to supplement GAAP measures in evaluating our flexibility to allocate capital and pursue opportunities that may enhance shareholder value and the effectiveness of our strategies, to make budgeting decisions and to compare our performance against that of our peer companies, many of which present similar non-GAAP financial measures.
While expenditures and dispositions of property and equipment will fluctuate on a period-to-period basis, we seek to ensure that we have adequate capital on hand to maintain ongoing operations and enable growth of the business. Additionally, free cash flow is of limited usefulness in that it does not represent residual cash flows available for discretionary expenditures due to the fact the measures do not deduct the payments required for debt service and other contractual obligations or payments.
We define free cash flow as the sum of our net cash provided by (used in) operating activities less our capital expenditures. Our calculation of free cash flow may not be comparable to the calculation of similarly titled measures reported by other companies. The reconciliation between free cash flow and net cash provided by (used in) operating activities (the most comparable GAAP measure) for the periods presented is shown below (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Net cash provided by (used in) operating activities | $ | 40,773 | $ | (14,060) | |||||||
| Purchases of property, plant and equipment | (6,187) | (6,252) | |||||||||
| Free cash flow | $ | 34,586 | $ | (20,312) | |||||||
41
Table of Contents
There can be no assurance that we will not modify the presentation of the previously presented non-GAAP financial measures in the future, and any such modification may be material. Non-GAAP financial measures have important limitations as analytical tools and you should not consider non-GAAP financial measures in isolation or as a substitute for analyses of our operating results or cash flows as reported under U.S. GAAP. Non-GAAP financial measures may be defined differently by other companies in our industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
Contractual Obligations
We enter into contractual obligations in the normal course of business.
Lease Commitments
We lease buildings, warehouses, and office facilities. The remaining lease terms are generally between 0.5 and 7.0 years. These leases are classified as operating leases. Our total remaining undiscounted future minimum lease payments as of September 30, 2026 were $26.8 million, with $6.9 million due in less than one year. See Note 7, “Leases,” in our unaudited condensed consolidated financial statements and related notes thereto included herein and Note 10, “Leases,” in our audited consolidated financial statements and related notes thereto included in the IPO Prospectus for further information related to our lease obligations.
Contractual Commitments
The Company has certain contractual purchase commitments under agreements with remaining terms in excess of one year that are $2.3 million in the aggregate as of September 30, 2026.
Off-Balance Sheet Arrangements
As of September 30, 2026 and December 31, 2025, we had no material off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Estimates
The following should be read in conjunction with the critical accounting estimates presented in the IPO Prospectus.
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical estimates include those related to slow-moving or obsolete inventory, estimated useful lives of long-lived assets, the valuation of acquired intangible assets, goodwill impairment testing, the recognition of revenue over time for certain customer contracts, income taxes, the TRA liability, the number of performance-based restricted stock units that will vest, the valuation of the Series A preferred units embedded derivative liability, and the valuation of the Company’s contingent consideration liability. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
Included below are selected critical accounting estimates that were added or modified during the three months ended September 30, 2026. For further discussion regarding critical accounting estimates, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the years ended December 31, 2025 and 2024 in the IPO Prospectus.
42
Table of Contents
Revenue Recognition
Adjustments to original estimates for a contract’s revenue, estimated costs at completion and estimated profit or loss are often required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications, including the finalization of undefinitized contract actions, occur. The impact of revisions in estimate of completion and variable consideration for all types of contracts is recognized on a cumulative catch-up basis in the period in which the revisions are made. Changes in variable consideration associated with the finalization of undefinitized contract actions could result in cumulative catch up adjustments to revenue that could be material. During the three and nine months ended September 30, 2026 and 2025, changes in accounting estimates on contracts recognized using the over time method are presented below. Amounts representing contract change orders or claims are included in revenue if the order or claim meets the criteria of a contract or contract modification in accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).
The table below summarizes the favorable (unfavorable) impact to revenue as a result of changes in the estimated progress towards completion across programs for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Stock Compensation
Subsequent to the Organizational Transactions and the IPO, the Company granted performance-based restricted stock units (“PSUs”) to certain employees. PSUs represent the right to receive shares of Class A common stock at specified future dates. The Company accounts for stock compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). Stock compensation expense recognition starts on the grant date and occurs using the accelerated attribution method over the implicit or explicit service period when a performance condition is deemed probable of achievement. Expense recorded for performance-based awards is reversed if the performance conditions are no longer deemed probable of achievement or ultimately are not achieved. The PSUs are subject to a service-based vesting condition and performance conditions. The service condition is generally satisfied via continued service through the first quarter of 2029. The performance conditions are consolidated revenue and adjusted EBITDA targets for each of 2026, 2027 and 2028, as determined by the Board of Directors on an annual basis. The number of PSUs eligible to vest range from 50% to 200% of the number of PSUs granted, which is determined by whether the specified minimum, target or maximum revenue or adjusted EBITDA thresholds for each performance year are achieved. Accordingly, the Company is required to estimate the number of PSUs that ultimately will vest, which is inherently uncertain and requires significant judgment. During the three months ended September 30, 2026, the Company granted 6,442 PSUs with a weighted-average grant date fair value of $17.44 per share. One-third of these PSUs will not be granted for accounting purposes (i.e., expense recognition) until the first quarter of 2027 when specified minimum, target and maximum revenue and adjusted EBITDA thresholds for 2027 has been determined by the Board of Directors, and one-third of these PSUs will not be granted for accounting purposes (i.e., expense recognition) until the first quarter of 2028 when specified minimum, target and maximum revenue and adjusted EBITDA thresholds for 2028 has been determined by the Board of Directors. During the three and nine months ended September 30, 2026, the Company recognized approximately $1.4 million and $2.1 million of stock compensation expense related to the PSUs.
Income Taxes
Following the completion of the Organizational Transactions, the Company became subject to U.S. federal, state, and local income taxes on its share of taxable income earned through its interest in Holdings LLC assessed at the applicable corporate income tax rates. The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). The Company recognizes for AEVEX Corp. and certain C-corporation operating subsidiaries deferred tax assets and liabilities for the expected future tax consequences of events that have been included in their tax returns or the consolidated financial statements. Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amount and the tax basis of assets and liabilities, along with net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized.
43
Table of Contents
The Company evaluates its tax positions for any uncertainties based on the technical merits of the positions taken. The Company recognizes the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be upheld on examination by taxing authorities. The Company has analyzed the tax positions taken and has concluded that, as of September 30, 2026 and December 31, 2025, there were no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability or disclosure in the consolidated financial statements. Management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain state jurisdictions.
Tax Receivable Agreement
In connection with the Organizational Transactions, AEVEX Corp. entered into the Tax Receivable Agreement (“TRA”) with the TRA Rights Holders. The TRA provides for the payment by AEVEX Corp. to such pre-IPO owners of 85% of certain specified U.S. federal, state and local income tax benefits, if any, that the Company actually realizes. We will retain the benefit of the remaining 15% of these net cash savings. The Company accounts for the initial recognition of the estimated income tax effects resulting from the purchase or exchange of LLC Units via an increase in deferred income tax assets (net of any required valuation allowance), based on enacted tax rates at the date of the purchase or exchange, along with the corresponding increase in the estimated TRA liability, as a change in stockholders’ equity. Subsequently, the Company accounts for changes in the estimated amounts payable under the TRA in accordance with ASC Topic 450, Contingencies (“ASC 450”). As such, subsequent changes in the measurement of the estimated TRA liability between reporting periods are recognized as an adjustment to other income, net in the consolidated statements of operations.
Changes in the estimated TRA liability may occur based on changes in expected future taxable income, changes in applicable tax rates or other changes in tax attributes that may occur and impact the expected future tax benefits to be realized by the Company. Estimating future taxable income is a key input in calculating the TRA liability, and is inherently uncertain and requires significant judgment.
As of September 30, 2026, our estimated TRA liability balance was approximately $85.1 million.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations within the United States and as such we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and credit risk. Information related to quantitative and qualitative disclosure about this market risk is set forth below.
Interest Rate Risk
We are exposed to market risk for changes in interest rates applicable to our cash and cash equivalents and debt. We had cash and cash equivalents totaling $78.6 million and $27.9 million as of September 30, 2026 and December 31, 2025, respectively. Our cash and cash equivalents were primarily invested in interest bearing demand deposit accounts. Our primary exposure to interest rate risk results from outstanding borrowings under our credit agreements. We estimate that a 100-basis point increase in interest rates for the three and nine months ended September 30, 2026 would have resulted in approximately a $0.3 million and $1.3 million, respectively, increase in interest expense.
Inflation Risk
We have generally experienced increases in our costs of labor, materials and services consistent with overall rates of inflation, but we do not believe that inflation has had a material effect on our business, results of operations, or financial condition. We expect the impact of such increases will be mitigated by efforts to lower costs through manufacturing efficiencies, seek alternative sourcing and reevaluate pricing, as we did in the prior periods. However, any continued cost inflation and supply chain disruptions may require similar efforts to mitigate the impact of continued cost inflation and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.
44
Table of Contents
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026, the end of the period covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2026, our disclosure controls and procedures were not effective, due to the material weaknesses in our internal control over financial reporting described below.
Material Weaknesses in Internal Control over Financial Reporting
Previously Identified Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
As previously reported, we identified material weaknesses in our internal control over financial reporting. We did not design and maintain an effective control environment, as we lacked a sufficient complement of personnel with an appropriate level of internal controls and accounting knowledge, training and experience commensurate with our financial reporting requirements. The limited personnel resulted in our inability to consistently establish appropriate authorities and responsibilities to support our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions. Further, due to rapid business growth, the design and implementation of controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting. These material weaknesses contributed to the following additional material weaknesses: We did not design and maintain formal accounting policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting and disclosures, including controls over the preparation and review of account reconciliations and journal entries, and control activities related to all significant accounts and disclosures. These material weaknesses resulted in audit adjustments to substantially all account balances in the Company’s consolidated financial statements as of and for the years ended December 31, 2025 and 2024, certain of which were material. In addition, these material weaknesses resulted in immaterial errors related to inventories, prepaid expenses, cost of revenue, and selling, general and administrative expenses as of and for the year ended December 31, 2025, immaterial errors related to revenue, cost of revenue, contract assets, and accrued expenses as of and for the year ended December 31, 2025 and for the three months ended March 31, 2026, and immaterial errors related to segment reporting disclosures for each of the interim and annual periods ended December 31, 2025 and for the interim period ended March 31, 2026.
In addition to the foregoing, we did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements, specifically, with respect to: (i) program change management controls for financial systems to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel; (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored; and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in a misstatement to the financial statements; however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management determined that these deficiencies in the aggregate constitute a material weakness.
45
Table of Contents
Additionally, these material weaknesses could result in misstatements of substantially all account balances and disclosures that would result in a material misstatement to our consolidated financial statements that would not be prevented or detected.
Material Weaknesses Related to Acquired Entity
On September 8, 2026, we completed the acquisition of BlackSea. Subsequent to the closing, we conducted initial assessments into certain processes and controls of BlackSea. Based on our initial and limited assessments, BlackSea did not design and maintain effective controls related to (1) the development and review of estimated costs-to-complete used in recognizing revenue over time; and (2) the preparation and review of account reconciliations. Based on our initial assessment, AEVEX’s management determined that these deficiencies constitute material weaknesses in internal control over financial reporting related to the recently-acquired BlackSea business as of September 30, 2026. These material weaknesses resulted in audit adjustments, certain of which were material, that were recorded as part of the preparation of the BlackSea financial statements as of and for the year ended December 31, 2025. Additionally, the material weaknesses could result in could result in misstatements of substantially all BlackSea account balances that would result in a material misstatement to our consolidated financial statements that would not be prevented or detected.
Remediation Efforts
As it relates to the previously identified material weaknesses, we are continuing to take steps intended to remediate these material weaknesses and to strengthen our internal control over financial reporting. These actions include, among other things:
•hiring additional personnel with appropriate technical accounting, financial reporting and internal control expertise;
•engaging a third-party advisory firm to assist in the design and implementation of control activities across the business processes that support the Company’s significant accounts and disclosures;
•with the assistance of a third-party advisory firm, designing and implementing a formal financial statement risk assessment in order to identify material financial statement line items for which key controls are needed in order to ensure complete and accurate financial reporting;
•designing and implementing training procedures within the Company’s accounting and finance functions to enhance knowledge and understanding of internal control over financial reporting; and
•developing a detailed remediation plan which includes activities related to creating and maintaining formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures; designing and implementing controls related to the preparation and review of journal entries and account reconciliations to ensure proper segregation of duties; and information technology general controls for all relevant information systems, including controls over program change management, the review, approval and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing for new systems.
As it relates to the material weaknesses related to the acquired entity, we have initiated the following actions:
•Standardization of Revenue Recognition Policies: We are transitioning BlackSea’s contract accounting to our corporate revenue recognition framework. This includes implementing formalized review controls over the development of estimated costs-to-complete and establishing separate accounting protocols to isolate and properly accrue assurance-type warranty costs at the time of sale.
•Overhaul of the Reconciliation Framework: We are deploying our corporate financial operations team to enforce rigorous, timely, and accurate account reconciliation procedures at BlackSea. We are establishing mandatory thresholds for identifying, tracking, and resolving trial balance variances, with strict oversight from corporate controllership.
•Prepaid Asset and Expense Review: We are implementing robust review controls over the classification of incurred costs to ensure correct capitalization criteria are applied, preventing the improper deferral of expenses into prepaid asset accounts.
46
Table of Contents
•Personnel Support: We have placed experienced corporate and technical accounting personnel within the BlackSea finance function to perform interim transaction reviews and look-back procedures until the control environment is stabilized.
The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above, the controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are effective.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the third quarter of 2026 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.
47
Table of Contents
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to Note 9, Commitments and Contingencies, to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information relating to this item.
ITEM 1A. RISK FACTORS
Information regarding our risk factors is disclosed under the section entitled “Risk Factors” in our prospectus filed with the Securities and Exchange Commission under Rule 424(b) on June 5, 2026, with such risk factors incorporated herein by reference. Please refer to that section for disclosures regarding the risks and uncertainties related to our business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The information required by this Item was previously reported on the Company's Current Report on Form 8-K filed with the SEC on August 12, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Insider Trading Arrangements
48
Table of Contents
ITEM 6. EXHIBITS
| Exhibit No. | Description | |||||||
| 2.1+ | Agreement and Plan of Reorganization, dated as of August 12, 2026, by and among AEVEX Corp., High Tide Merger Sub 1, Inc., High Tide Merger Sub 2, LLC, Maritime Applied Physics Corporation, Black Sea Technologies, LLC and Black Sea Holdco, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 12, 2026) | |||||||
| 3.1 | Amended and Restated Certificate of Incorporation of AEVEX Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 20, 2026) | |||||||
| 3.2 | Amended and Restated Bylaws of AEVEX Corp. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on April 20, 2026) | |||||||
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101.INS* | Inline XBRL Instance Document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
| + | Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted exhibits or schedules to the SEC upon its request. | |||||||
| * | Filed herewith | |||||||
| ** | Exhibit is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing | |||||||
49
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AEVEX Corp. | |||||||||||
Date: November 12, 2026 | By: | /s/ Roger Wells | |||||||||
| Chief Executive Officer and Director | |||||||||||
| (Principal Executive Officer) | |||||||||||
Date: November 12, 2026 | By: | /s/ Todd Booth | |||||||||
| Chief Financial Officer | |||||||||||
| (Principal Financial and Accounting Officer) | |||||||||||
50