Welcome to AV's fourth quarter and full fiscal year 2026 earnings call. This afternoon, we also filed a slide presentation with our earnings release and posted the presentation to the investor section of our website under Events and Presentations. Welcome, everyone, to our fourth quarter and full fiscal year 2026 earnings conference call. I will begin by summarizing our quarterly and full-year performance, followed by Sean, who will review our financial results in greater detail and then discuss guidance for fiscal year 2027.
I am pleased to report record fourth quarter results across several key financial performance metrics, delivering AV's strongest financial performance to date. We reported fourth quarter revenues of nearly $642 million, with increased funded backlog of $1.2 billion. Full-year adjusted EBITDA of $286 million came in above the high end of our most recent guidance range. Non-GAAP EPS was $3.31 per share, well above the higher end of our guidance.
With demand for our solutions continuing to rise, our work over the past year has positioned AV as a stronger, more resilient, and diversified company. First, we achieved record fourth quarter revenue of $642 million and record full-year revenue of nearly $2 billion. Organic revenue growth for the quarter was 31% and 30% for the full fiscal year. Second, we delivered strong fourth quarter adjusted EBITDA of $140 million, or 22% of revenue on higher sales volume, demonstrating AV's profitability potential with increased volume.
| Metric | Period | Current guidance |
|---|---|---|
| FY2027 revenue | — | $2.125B-$2.225B (~10% growth at midpoint; excludes SCAR revenue) |
| FY2027 adjusted EBITDA | — | $305M-$325M |
| FY2027 adjusted EPS | — | $3.02-$3.34 (roughly flat YoY on higher depreciation/cloud amortization, up ~$37M or 77%) |
| FY2026 actual vs guidance | — | Revenue nearly $2B (ahead of recent guidance); adjusted EBITDA $286M (above high end); adjusted EPS $3.31 (above high end) |
| Metric | YoY | Note |
|---|---|---|
| Q4 revenue | +31% organic (+30% pro forma) | Record quarter; strong demand across Switchblade/loitering munitions, Titan counter-UAS, Red Dragon and JUMP 20. |
| Full-year revenue | +30% organic | First full year including BlueHalo; ahead of most recent quarterly guidance and in line with initial guidance. |
| Autonomous Systems (AxS) revenue | +49% Q4 pro forma | Precision strike/defense +80% (Switchblade, Red Dragon, Titan); uncrewed aircraft +17% (JUMP 20-X, Puma, P550); 76% of Q4 revenue, 69% of FY revenue. |
| Space, Cyber & Directed Energy (SCDE) revenue | -8% Q4 pro forma | SCAR termination and government funding delays; space & directed energy +23% (LOCUST), offset by Cyber Mission Solutions -26%. |
| Q4 adjusted gross margin | down from 40%; highest quarter of FY2026 (+730 bps vs Q2 low) | Product margin strong at 44% on volume; service margin only 2% on a Cyber funding delay and a one-time forward loss/EAC on a legacy BlueHalo contract. |
| Full-year adjusted gross margin | — | In line with original guidance. |
| Q4 adjusted EBITDA | more than doubled from $62M | BlueHalo accretion and strong organic growth; up from 11% margin in Q3. |
| Full-year adjusted EBITDA | — | Above the high end of revised guidance; AxS $289M (21% margin) offset by SCDE -$3M. |
| Q4 adjusted EPS | up from $1.61 | Higher volume and EBITDA. |
| Full-year adjusted EPS | up from $3.28 | Above the high end of guidance. |
| Incremental goodwill impairment | — | Additional charge tied to SCAR termination for convenience; drove a Q3 restatement (no impact on revenue, cash, or non-GAAP measures). |
| Q4 bookings | — | Timing delays of some large program awards; FY bookings $2.7B. |
| Funded backlog | — | End of Q4; 73% AxS, 27% SCDE. |
| Unfunded backlog | — | Now excludes $1.5B SCAR following termination for convenience. |
| Cash and investments | +$65M vs Q3 | Strong Q4 operating performance. |
| Free cash flow | — | First positive free-cash-flow quarter since Q1 FY2025. |
| Total debt / net leverage | — | Balance sheet post-BlueHalo financing. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| BlueHalo acquisition | — | Described as transformational, nearly doubling AV in size and adding counter-UAS, space, cyber and advanced solutions; management moving acquired products toward commercial models. | — |
| SCAR aftermath | — | Incremental $89M goodwill impairment, Q3 restatement, and removal of $1.5B SCAR unfunded backlog following termination for convenience. | — |
| Internal controls | — | Material weakness identified in the goodwill impairment review process; enhanced controls implemented. | — |
| Leadership | — | CFO transition to Sean Woodward from Kevin McDonnell. | — |
| Capacity expansion | — | Salt Lake City facility on track for spring 2027 production (potential >$2B of product/year); Huntsville, Alabama expansion for FE-1 missile scaling. | — |
| Directed energy | — | LOCUST directed-energy counter-UAS at under $10 per shot positioned as a game-changing capability early in a large adoption cycle; LOCUST X3 introduced. | — |