York Space Systems, Inc. Q2 FY2026 earnings call

• Contract Wins & Business Development:

  • In H1 2026, York secured 8 new contracts with an 88% proposal win rate, including 4 new contracts, 2 task order wins, and one new IDIQ add-on in the 45 days ending Q2 2026.
  • Secured three new IDIQ vehicles, expanding coverage to 10 distinct mission areas, with two funded delivery orders already awarded shortly after IDIQ award.
  • Awarded a July 2026 task order for military capabilities built on commercial technology, and an August 2026 IDIQ task order for an on-orbit demonstration.
  • Selected for the US Space Force Nightstar IDIQ, which enables competition for task orders that integrate York satellite platforms with Atlas Space Operations' (a York subsidiary) global ground network.

• Acquisitions & Supply Chain:

  • Completed the acquisition of Allspace, a leader in assured communications terminals, in July 2026. Allspace brings existing Army and Navy contracts, including a new DIU award and a $6 million follow-on order for 23 additional Navy terminals, and expands York's addressable market for unmanned systems.
  • Completed the acquisition of Celestial, a leading next-generation space solar technology provider, in June 2026. This acquisition domesticates a critical supply chain input previously controlled by China, reducing geopolitical risk and enabling advanced solar as a competitive differentiator.
  • Previously acquired Atlas Space Operations and Orbeon, which are already contributing to operational capabilities and SG&A costs in 2026.

• Operational Execution:

  • Became the first prime contractor to complete all Tranche 1 Transport Layer satellite deliveries, launching 21 additional satellites on a dedicated Falcon 9 mission in Q2, bringing the program total to 42 successfully deployed satellites (42 for 42) ahead of all other program awardees.
  • Completed initial mission objectives for the Dragoon program in months, demonstrating ability to deliver tactical communications at speed and scale.
  • Expanded prime integration capabilities to geosynchronous orbit via the Nemesis program for space domain awareness missions.

• Market & Strategic Positioning:

  • Management observes a permanent shift in U.S. government spacecraft acquisition away from frequent large RFPs to a multi-step IDIQ model: IDIQ awards take longer to complete initially, but funded task orders are awarded much more quickly after IDIQ onboarding, with small initial contracts that can scale to multi-billion dollar operational programs over time. York has won 6 IDIQ awards in 2026 to date, positioning the company for strong 2027 growth.
  • York maintains a total potential backlog of $1.85 billion on awarded contracts, with a total identified pipeline exceeding $11.5 billion across government and commercial opportunities.
  • Commercial sector opportunities are growing following a major constellation win earlier in 2026, with York's scalable low-cost manufacturing positioning it to capture increasing commercial share over time.

York Space Systems does not break out detailed standalone financial performance for separate product segments in this call, but provides the following revenue contribution breakdown by mission area: 23% of total contracts are in network communications, while the remaining 77% address non-communication mission capabilities including AMTI, advanced fire control, remote proximity operations, missile warning, and missile track. Acquired subsidiaries (Allspace, Atlas Space Operations, Celestial) are expected to contribute 10-15% of total 2026 full-year revenue overall. For Q2 2026, total company revenue was $92.5 million, a 10% increase year-over-year, with gross margin of 24% (up 13pp YoY), gross profit of $22.2 million (up $9.5 million YoY), contribution margin of 42% (up 18pp YoY), and contribution margin dollars of $39.3 million (nearly double the $20.3 million YoY level).

• Management revised full-year 2026 revenue guidance downward to a range of $375 to $405 million, with a new midpoint of $390 million, $180 million below the prior midpoint of $570 million.
• The downward revision stems from two main factors: 30% of the prior guidance midpoint was tied to expected 2026 new contract awards, which have shifted right to 2027 due to the slower upfront timeline of the new government IDIQ acquisition approach; remaining downward adjustment comes from supply chain delays that have pushed expected 2026 revenue recognition into 2027. These headwinds are partially offset by incremental expected revenue from 2026 acquisitions.
• Gross margin for the remainder of 2026 is expected to remain in the mid-20% range, consistent with Q2 2026 performance.
• Most of the planned increase in public company SG&A infrastructure is complete, with only minor incremental SG&A increases expected for the remainder of 2026.
• The lower 2026 revenue base and acquisition-related costs are expected to negatively impact full-year 2026 adjusted EBITDA; management did not provide formal 2027 guidance for revenue or margins in this call.

• Ongoing supply chain delays have pushed expected revenue recognition for existing programs from 2026 into 2027; management did not disclose specific vendor issues, but is actively working with suppliers to mitigate delays.
• The shift to the IDIQ acquisition model for U.S. government contracts lengthens award timelines and creates uncertainty around near-term revenue conversion from new contract wins, even for companies that have secured IDIQ positions.
• Acquisition integration adds near-term operating costs that pressure 2026 adjusted EBITDA, even as acquisitions expand long-term addressable market and reduce supply chain risk.
• The U.S. government budget allocation process and approval requirements limit management's ability to disclose full details of new contract awards and their potential future size, creating uncertainty around future revenue growth.

Q: What is the long-term size potential of the new IDIQ contracts you have won this year under the new government acquisition model, and can York capture its $11.5 billion pipeline organically or will it need more M&A to unlock that opportunity? / A: Management says the best indicator of future IDIQ program size is the published 2027 U.S. President's budget, which shows planned spending levels for key focus areas including space data networks, missile warning, and missile tracking. York's $11.5 billion identified pipeline consists of specific opportunities the company is already pursuing with its existing organic capabilities, so no additional M&A is required to pursue this set of opportunities. More details on recent Space Data Network IDIQ awards will be released in a public customer-approved PR in the coming days.

Q: What share of the 2026 revenue guidance cut comes from delayed IDIQ awards versus supply chain delays, and what is the nature of the current supply chain issues? / A: Roughly 30% of the prior guidance midpoint was tied to expected 2026 revenue from new 2026 contract wins, which have shifted right due to the slower upfront IDIQ award timeline. The remaining portion of the guidance cut comes from supply chain delays that push revenue recognition into 2027. These headwinds are partially offset by incremental revenue from new acquisitions. Management declined to name specific vendors, but is actively working with suppliers to resolve delays, and built the guidance cut based on the most current timeline projections.

Q: Can you provide an update on your pre-built inventory strategy for faster task order delivery and the Allspace acquisition's use cases and growth outlook? / A: Pre-built inventory, funded by IPO proceeds, is already delivering shorter delivery timelines for newly won IDIQ task orders, giving York a competitive advantage over competitors that start production from scratch after award. Inventory is already being allocated to recently won programs, and the strategy has been successful so far, with management planning to continue supporting it. Allspace produces jam-resistant assured communications and alternative PNT terminals, which are critical for the fast-growing unmanned systems market that management expects to see strong long-term demand from. Allspace has continued to win new contracts post-acquisition, and integration into unmanned system programs will drive significant growth over the next 2-3 years. Allspace's backlog will be added to York's backlog when Q3 2026 results are reported, adding a small incremental amount.

Q: What types of missions make up York's commercial pipeline, and what is the expected margin profile for commercial business? / A: Commercial pipeline missions fall into two broad buckets: traditional Earth observation (including visible, SAR, and infrared imagery), which has growing demand from both commercial and government customers that buy commercial Earth observation services; and formerly government-provided capabilities (including precise GPS and weather data) that the government is increasingly shifting to commercial providers. Management notes that commercial margins are slightly lower than average government margins, but the difference is not large enough to meaningfully move overall company margin at the current revenue mix.