Applied Aerospace Q3 Revenue Jumps 48.6% to Record $182.1M

Applied Aerospace & Defense (NYSE: AADX) reported record third-quarter 2026 revenue of $182.1 million on 11 November 2026, up 48.6% from $122.5 million a year earlier, alongside net income of $30.6 million and diluted earnings per share of $0.18. The Huntsville-based maker of space and defense hardware said Adjusted EBITDA rose 37.4% to $39.7 million and contract backlog reached $1.26 billion as of 30 September 2026, giving the company what management described as multi-year revenue visibility across its three core markets.

Context — why the Q3 2026 print matters now

The quarter stands out because growth was broad rather than concentrated. Each of Applied's three end markets grew by double digits, and the company said acquisitions closed in 2026 added capabilities without masking the underlying trend: organic revenue rose 20.3%, or $24.9 million, once those deals are excluded.

That split matters for how investors read the headline. A 48.6% headline gain that leans heavily on acquired revenue can flatter a single quarter, but Applied's disclosure that roughly two-fifths of the increase came from existing operations gives a cleaner read on demand for its engineered systems.

Applied's own framing points to sustained demand across defense and space budgets. The company cited higher launch cadence on launch vehicle programs, aftermarket demand across a large installed base of military rotorcraft, and increased funding for next-generation fixed-wing, vertical lift, and autonomous airborne systems.

The catalyst chain is straightforward: defense budgets are rising across a broad range of fixed-wing and rotorcraft platforms, missile and munition rearmament continues, and layered missile defense priorities are pulling volume through Applied's sensing and strike segment. Applied operates in an environment where program funding decisions translate into multi-year contract awards, and its backlog figure is the clearest evidence that those decisions are landing on its order book.

Applied also closed its initial public offering during the first nine months of 2026, raising $635.6 million in net proceeds, which reshaped its capital structure alongside the acquisitions. That combination of fresh equity and deal activity frames the current quarter as the first clean look at the post-IPO operating profile. For readers tracking the broader equities landscape, the print is a data point on how defense-exposed industrials are converting budget cycles into revenue.

Data — what the Q3 2026 numbers show

Revenue by end market tells the sharper story. Advanced Sensing and Precision Strike Systems, formerly labeled C5ISR, generated $48.7 million in the quarter versus $12.4 million a year earlier. Defense Aviation and Airborne Systems produced $94.2 million against $80.3 million. Space and Launch Systems contributed $39.1 million versus $29.9 million.

Segment	Q3 2026	Q3 2025
Space and Launch Systems	$39.1M	$29.9M
Defense Aviation and Airborne Systems	$94.2M	$80.3M
Advanced Sensing and Precision Strike	$48.7M	$12.4M
Total revenue	$182.1M	$122.5M

Gross profit rose to $42.7 million from $34.3 million, but operating income was nearly flat at $16.4 million versus $15.7 million a year earlier, as selling, general and administrative expenses climbed to $16.0 million from $12.1 million and intangible amortization rose to $10.3 million from $6.5 million.

Adjusted EBITDA margin, however, compressed to 21.8% from 23.6%. The company's nine-month figures show the same tension: net loss of $138.5 million over the first three quarters against a $9.2 million loss a year earlier, driven by $113.3 million of share-based compensation expense, up from $2.4 million. Free cash flow was negative $9.5 million in the quarter and negative $113.2 million for the nine months.

Applied's balance sheet expanded sharply. Total assets reached $1.54 billion from $999.3 million at 31 December 2025, with goodwill rising to $582.7 million and intangibles to $343.0 million. Long-term debt fell to $399.2 million from $627.0 million.

Analysis — what it means for defense and space exposure

Applied sits in the subcontractor tier of the defense supply chain, which means its order book is a read-through on prime contractor activity. Rising content on launch vehicle programs and increased sales volume across integrated air and missile defense systems point to demand flowing down from larger platform awards rather than from a single program.

The concentration of growth in Advanced Sensing and Precision Strike, which roughly quadrupled year over year, is the most consequential shift. That segment now represents 26.8% of quarterly revenue, up from 10.1% a year earlier, changing the company's mix toward missile defense and precision munitions work.

A counter-argument deserves weight. Operating income barely moved despite the 48.6% revenue gain, and Adjusted EBITDA margin fell 180 basis points. Integration and restructuring costs of $3.5 million in the quarter, transaction costs of $1.8 million, and the amortization load from acquisitions are absorbing much of the incremental gross profit. If those costs persist beyond the integration window, the revenue headline overstates operating use.

The nine-month share-based compensation figure of $113.3 million also warrants scrutiny. That expense is excluded from Adjusted EBITDA, so the non-GAAP measure looks materially stronger than the GAAP loss of $138.5 million over the same period.

Positioning around the name reflects that split. Investors focused on backlog and segment growth have a reason to look through integration noise, while those anchoring on GAAP profitability have a reason to wait for the cost line to normalize. The negative free cash flow over nine months, driven by a $92.2 million build in contract assets, suggests working capital is funding growth ahead of collections.

Outlook — what to watch next

Applied raised its full-year 2026 guidance and now expects total revenue of $660 million to $670 million and non-GAAP Adjusted EBITDA of $137 million to $142 million. The company did not provide a GAAP reconciliation for those forward figures, stating it cannot do so without unreasonable effort given the difficulty of projecting transaction and non-core items.

Backlog conversion is the first thing to track. At $1.26 billion, the order book covers roughly two years of revenue at the guided run rate, and how quickly contract assets turn into billings will determine whether free cash flow turns positive.

Integration costs are the second. Applied flagged plant consolidation, reductions in force, and executive severance within its restructuring line, so the pace at which those charges taper will shape GAAP operating income.

Applied hosted a conference call on 11 November 2026 at 8:30 a.m. Eastern to discuss the quarter, with an audio replay available through the passcode it disclosed. The company did not disclose the terms of its 2026 acquisitions in the release.

Frequently Asked Questions

What does Applied Aerospace & Defense do?

Applied builds complex, mission-critical hardware for extreme operating environments across three markets: Space and Launch Systems, Defense Aviation and Airborne Systems, and Advanced Sensing and Precision Strike Systems. The company says it has over 120 years of advanced manufacturing heritage, operates 11 purpose-built facilities across six states, and holds more than 1.5 million square feet of production capacity. It covers rapid prototyping, large-scale production, and aftermarket sustainment for enduring platforms.

Why did Applied's net income rise while its nine-month result was a loss?

The quarterly and nine-month figures diverge because of timing and non-cash charges. Q3 net income of $30.6 million included a $24.2 million income tax benefit, while the nine-month period carried $113.3 million of share-based compensation expense tied to the IPO. That equity charge, plus acquisition amortization, pushed the year-to-date result to a $138.5 million loss despite record quarterly revenue.