York Space Systems (YSS) Q2 2026 earnings call transcript

Hello everyone and welcome to York Space System's second quarter, 2026 earnings call. With me on the line, our Dirk Wallinger, our CEO and Brian France, our Chief Accounting Officer and Interim CFO. Please note that our earnings release is available at ir. yorkspaceystems. com. In addition, we have posted an earnings presentation to accompany our prepared remarks on the same website.

Lastly, after this call, we will post a transcript of our prepared remarks and an audio replay of this call. For those listening to the re-broadcast of this call, we remind you that the remarks made herein are as of today, Thursday, August 13, 2026 and have not been updated subsequent to this call. During this call, we will refer to certain non-GAP measures. A reconciliation of these measures to the most directly comparable GAP measures can be found in our earnings press release. We will also make statements that are considered forward-looking, including those related to our 2026 outlook, future revenue and growth prospects, anticipated award times, pipeline, award opportunities, backlog, M&A strategy, inventory building and the benefits of our acquisitions.

Listeners are cautioned that our forward-looking statements involve certain assumptions and are inherently subject to risks and uncertainties that can cause our actual results to differ materially from our current expectations. We advise listeners to review the risk factors and other discussions included in our 2025 annual report on Form 10K, the 2026 Form 10Qs and our other filings with the SEC. After the completion of our prepared remarks, we will open the call for questions.

Now, I'll turn the call over to Doug.

Thanks, Chris. Hello, and welcome to York's second quarter 2026 earnings call. I appreciate you taking the time to join us. Before we get into the highlights from the quarter, I want to take a moment to introduce Brian Frans, who will be stepping into the role of interim chief financial officer at York. Brian joined us as chief accounting officer and played a central role in our transition to a public company with direct responsibilities for financial reporting, internal controls, and SEC compliance. Brian brings more than three decades of financial leadership experience across public and private companies, including prior service as CFO of Remax International and principal financial officer of Intrepid Pottish. You'll hear from Brian on the quarter's financials a bit later in the call.

Q2 was another strong quarter of execution for York. We launched 21 more satellites, added new customers, and expanded our portfolio of mission capabilities. Revenue for the quarter was 92.5 million, up 10% year over year. Our backlog stood at 592 million, and potential on awarded contracts reach 1.85 billion. Our identified pipeline now exceeds 11.5 billion. York's earnings deck describes these metrics, including potential on awarded contracts in more detail. In the first half of 2026, we added eight contract wins at an 88% win rate on our proposals. We added four more contracts in this quarter with two task order wins and another IDIQ ad in the last 45 days alone, a reflection of both the breadth of our capabilities and the confidence customers place in our performance on orbit.

We have expanded our national security customer base, including three new IDIQ vehicles, expanding our contracts to cover 10 different missionaries. Those IDIQs have generated two delivery orders, an early signal of how quickly today's onboarding contracts are now converting into real mission work. A few of these wins are worth calling out in more detail. In July, York was awarded a task order contract on one of our highly selective IDIQs to deliver military system capabilities built on commercial technologies. That award reinforces our position as one of the only providers with an on orbit performance record for operational systems and the commercial manufacturing scale required to support the resilient multi vendor supply base the government is asking for.

In early August, we rewarded another IDIQ task order for an on orbit demonstration. The rapid conversion from IDIQ selection to multiple funded delivery order contracts in a matter of weeks reflects real near term demand for York's proven in production spacecraft as the government scales their space based architecture. We are encouraged that the government remains committed to a resilient supply base for their architectures, which strengthens the industrial base and delivers better outcomes for the warfighter. Our proven performance in orbit and ability to deliver at scale for operational systems is transitioning well into contract orders for next generation systems that are aligned with current budget allocations. Resilient and in theater need and that need is only expected to grow as unmanned systems play a more decisive role in modern conflict.

Their effectiveness and survivability depend directly on assured resilient communications across every phase of the mission. In an environment where air superiority is denied, space will be the enabling network for those communications and by extension the foundation of the defense architectures that will define the next era of warfighting. The character of conflict has changed and the architectures underneath it have to change with it. Whoever controls the assured communication systems controls the fight. That is why jam resistant communications and alternative PNT matter and it's why York is investing where we are. We are building for a warfighter who will operate across manned and unmanned formations and we intend to be the prime that delivers the space based infrastructure they will count on to win.

The changing character of conflict leads directly into our acquisition of all space completed in July. All space a leader in assured communications terminals extends our reach into adjacent markets and positions us to capture the accelerating demand for unmanned systems across every domain. All space also brings established contracts the Army and Navy with momentum already carrying into a new DIU contract and 6 million follow on order for 23 additional terminals from the Navy.

All space in our other subsidiaries are expected to contribute roughly 10 to 15% of 2026 revenue. In July we were selected by the U. S. Space Force for the night star IDIQ, further extending our mission portfolio capabilities. Night star positions us to compete for task orders integrating our satellite platforms with the global ground network operated by Atlas space operations, a wholly owned subsidiary of York. Our expanding portfolio of mission types and capabilities positions York to compete for a broader set of opportunities.

Roughly 23% of our contracts sit in network communications and the remaining 77% address operations, missile warning, missile track and more. That breadth aligns directly with where defense budgets are planned and enables York to compete across the full range of programs shaping the next generation of defense.

Shifting to the commercial side we continue to see commercial opportunities increasing following our constellation win earlier this year and anticipate commercial systems becoming a larger portion of our revenue potential and growth trajectory. Our demonstrated ability to deliver at scale at price points unmatched by competitors continue to make us an attractive partner in the commercial sector.

Shifting to execution. This quarter York became the first performer to complete its Tronch 1 transport layer deliveries launching a second dedicated Falcon 9 that put 21 York built satellites on orbit and bringing York's program record to 42 for 42 ahead of every other awardee. That's a track record customer C and it's showing up directly in awards we're winning today. Today York has put 55 satellites on orbit across eight launches and today we are actively operating five unique mission sets and three constellations. That combination of scale and mission breadth positions York as the new space industry leader by number of active missions range of capabilities on orbit and military systems operating space today. Additional highlights from the quarter include our resources mission which cleared its delta critical design review and currently remains on track for delivering Q4.

Nemesis extends York's prime integration model into geo in support of space domain awareness missions and reinforces our ability to prime integrate and deliver across orbital regimes. On the Dragoon program we completed our initial mission objectives in a matter of months demonstrating York's ability to deliver operationally relevant tactical communications at speed and scale and we completed our acquisition of Celestial a leading provider of next generation space solar technology. Celestial secures domestic control of a critical element of our supply chain currently controlled by China reduces geopolitical exposure across our manufacturing base and positions us to leverage advanced solar capabilities as a differentiator in future spacecraft designs.

Before I turn it over to Brian to review the financials in depth I want to speak briefly to what we're seeing across the broader US government acquisition landscape and what it means for York's growth trajectory. Through 2026 and increasingly in Q2 we've observed a meaningful shift in how the US government is acquiring spacecraft systems moving away from a rapid succession of larger RFPs to an IDIQ approach that is slow to start but often faster to accelerate task orders later. This approach has a longer cycle to award the IDQs initially but once IDIQs are awarded task orders can be awarded in more rapid succession without the need for follow on competitive award cycles. They generally pursue smaller on ramp task order contracts to start but can lead to multi-billion dollar opportunities later for true operational systems.

Highly selective IDIQs are more desirable as the budget size and smaller vendor pool represent significant revenue potential for awardees on discriminating IDIQs. York has been awarded six contracts under this new approach in 2026 alone and we view them as significant drivers of growth into 2027 as the follow on programs advance. York's contract wins range across very large swaths of capabilities that align well with the current budget allocations we are seeing. This shift is changing our expectations of award timing and as a result we are advising our full year 2026 revenue guidance.

Brian will walk through the specifics in a moment with our backlog potential on award contracts totaling 1.85 billion and an identified pipeline exceeding 11.5 billion the opportunity in front of us is substantial.

To wrap up York is leading the new space industry actively operating five unique missions and three constellations simultaneously we are executing consistently for our customers improving our hardware on-orbit and operational missions. We have secured eight new contracts in 2026 alone at an 88% win rate and we continue to expand our capabilities in line with where defense budgets are being planned. The opportunity in front of us is substantial and York is positioned to capture it and deliver meaningful long-term value.

With that I'll turn it over to Brian.

Thank you Dirk. As Dirk discussed we executed well during the second quarter. Closed two acquisitions since our last call and added more new customers that have the potential to be very large in 2027 and 2028. A revenue for the quarter was 92.5 million up 8.7 million or 10% compared to the same quarter in the prior year. The increase was primarily driven by revenues from acquisitions completed in the second half of 2025 and the first half of 2026 as well as our new commercial contract which we announced earlier this year. Revenue from our major government programs remained relatively flat year on year. Gross margin was 24% in the current year quarter up 13 percentage points from the year ago quarter which was negatively impacted by an EAC adjustment.

Our second quarter 26 gross margin also reflects higher gross margin contribution from our post log operations and support work. We expect our gross margin for the balance of the year to remain in the mid 20% range. Similarly gross margin dollars were 22.2 million in the quarter up 9.5 million in the year ago quarter driven by improved margin percent on a larger revenue figure. Contribution margin expanded 18 percentage points to 42% in the second quarter driven by a richer mix of newer vintage programs which tend to have higher margins than our older vintage programs. Our direct materials expenses decreased in Q2 2026 over the second quarter of 2025 as we approach the end of our production for our Tronch 1 transport layer satellites which in its post launch phase is incurring mostly labor costs.

As we now have all 42 of these satellites successfully in orbit and healthy our operation and sustainment revenues will increase and they have a higher contribution margin than the company average. Contribution margin dollars almost doubled growing to 39.3 million from 20.3 million last year driven by the aforementioned mix in the EAC adjustment in the second quarter of 2025.

Turning to operating expenses our SGNA plus R&D expenses increased 52% compared to the prior year quarter. This was primarily driven by an increase in overall headcount increases in overhead related to the public company uplift and incremental salaries and costs related to the acquisitions of Atlas or beyond into a lesser degree celestial which was in June of 2026. Naturally we will see an increase in SGNA expenses in the second half related to our acquisition of all space which occurred in July. Most of the increase in our public company SGNA infrastructure is complete and we expect those costs to only increase slightly through the rest of 2026. Adjusted EBITDA for the quarter was a loss of 9.5 million slightly elevated from the 8.9 million loss from the prior year quarter due to an increased operating expenses offsetting profitability growth in our gross margins.

Our liquidity remains strong as of June 30th we had cash and cash equivalents of 534 million and our $150 million revolving credit facility remains fully available to us for total liquidity of $684 million. I would note that we used $155 million of our cash subsequent to quarter end as we closed the all space acquisition. Our backlogs stood at $592 million as of June 30th down 8% from $642 million at the end of the first quarter but up 9% from the start of the year primarily due to our new commercial contract as well as a contract modification that occurred in the second quarter of 2026. Subsequent to quarter end we also received task orders related to one of our IDIQs and we believe those task orders will lead to larger awards in 2027.

As Dirk mentioned earlier we are bringing down our full year 2026 revenue guidance to a range of 375 to 405 million. This new midpoint of 390 million is 180 million below our prior midpoint of 570 million. As we said on our previous call about 30% of the prior midpoint of 570 million was new business. Given the contract environment that Dirk referenced we had removed the new business from our guidance for the rest of the year. The remainder relates to supply chain issues where revenue is moving to the right in to 2027 which is partially offset by revenue from our new acquisitions. We believe the right word shift of 2026 revenue plus the eight contracts we've already won so far this year position us to take significant strides in 2027 as the government looks to accelerate capabilities with proven providers.

Our goal is to expand our total addressable market in the second half. Further the acquisition of celestial which will bolster our supply chain certainty of solar cells in the acquisition of all space to expand our total addressable market will further impact adjusted even in the second half. And now I'll hand it back to Dirk for a quick summary.

Thanks Brian. So to conclude the US government has shifted their acquisition approach from a rapid succession of larger RFPs to an IDIQ approach that is slow to start but faster to accelerate task orders later. This acquisition approach has shifted significant contributions to revenue on our 11.5 identify pipeline into the 27 time frame. We are winning opportunities with an 88% win rate and eight new contracts in 2026. We have added four more contracts this quarter with two task order wins and another IDIQ ad in the past month and a half alone. With our new wins we have increased York's potential on awarded contracts which now exceeds $1.85 billion. York's very broad range of proven capabilities positioned as well and are aligned with anticipated budgets.

We remain bullish on our ability to win across acquisition approaches budgets and mission capabilities with our proven production and ability to deliver mission successfully.

And now I'll hand it back to the operator for questions. Operator?

Sure. So, you know, I think the best indicator of what you can expect from size is probably the 27 Department of War, sorry, the President's budget in the sense of like it's not going to provide the exact numbers but it's going to give you an idea right of kind of generally how much are they looking to spend on space data network? How much are they looking to spend on missile track, missile warning, et cetera. So I think that's the best way to kind of look at what these OTAs could eventually lead to. Right now the contract awards are going to are basically coming off of 25 and 26 budgets.

But like I said, the 27 gives you some idea of trajectory. Some of those wins were for the space data network. And so that's a pretty easy map to see kind of what the government's looking to spend on the space data network in the coming years. And that became public recently, like 10 minutes before the skull.

And we'll expand on that a little bit more with our with our own PR in the coming days as that becomes approved from the customer as well. But I think that's the best way to look at it.

Yeah, so right now the pipeline is identified pipeline. So those are specific opportunities that we are pursuing with our capabilities today. With no need for further acquisition or any any time of M&A activity. So those are specifically identified opportunities. I think the earnings deck, I think will be good in the sense of it can kind of formulate how much of those are commercial.

How much of those are classified and how much of those are government non classified as well. So I think that might be a good reference to get an idea of where we sit, but there's no further acquisition required to pursue those opportunities.

Perfect, appreciate the color. Thank you.

Sure. Thanks, Alex. So I'll kind of give the 10,000 foot perspective and commentary and then I'll hand it over to Brian for the more specifics. But look, generally, what's what's occurred is that there was more of a rapid succession of RFPs and 30% of that. We thought that we would be able to contribute to revenue in 26.

But because of the way that revenues recognize right essentially is a function of cost, it's more linear. So when you win a satellite program, you'll, you know, or a big satellite constellation will say. You'll recognize that revenue over the course of, you know, three years. So what it means is that you would need to have some wins in 26 and you would need to start recognizing that revenue. Like I said, about 30% Brian will correct me from wrong. About 30% of that was was go get.

And so we've done very well. The team was tasked with go get wins, which they did, right? Our win rate at 80% shows that we can win under any acquisition strategy. The challenge is just that it all shifted to the right in the sense that they, to the government, it was very important to put IDIQ's in place.

And it will be slower to start, which means less go get for 26 for us, frankly. But they're definitely showing at this point a rapid acceleration now that they have those IDIQ's in place, which is all in line with what we thought we would see. It just happened a little bit later than we would have liked. So I'll hand it over to Brian for his remarks.

Yeah, Alex, I think that was a pretty good summary that that dirt gave us. You know, the one, one thing I would add into that is, you know, we took the new business out as, as we described earlier. And we continue to see some of the supply chain issues and that those amounts kind of pushed into 2027.

You know, that was part of the equation here and then certainly that's offset by what we're seeing from new revenues coming in from the acquisitions. But that's, that's kind of the color and the pieces between of all the different buckets there.

I think that we probably, Brian, you know, I think quantitatively, we can maybe maybe give some insight there. I don't think we want to talk specifically about about vendors there.

Yeah, that's right. That's right, Dirk. We shouldn't do that. But, you know, we're continuing to monitor it. We continue to work with those vendors to try to understand and move some of that forward if we possibly can. But, you know, as we were looking at the guidance chains that we needed to do, we knew that at least this much needed to come out and that's why we pushed it out into 27.

Yeah, sure. So I'll kind of give you what I can. So it came out literally just before the call. I looked at it very quickly. It's what I don't want to do is say something that can get us in trouble with our with our new customer, right? I definitely don't want to do that. So I can confirm that they were OTAs under space data network.

I'm kind of going from memory, so I don't want to go too far there, but they are for the space data network, which is really great to see. Obviously, you know, we had felt and been assured by the government that there was going to be competition in this network. And obviously, this is this is a great indication that there absolutely is going to be competition in this network. They're looking for proven providers. That's that's the kind of providers that were under this selection in the under these task orders. So it's very exciting for us to see. As you know, you know, we were one of the builders of the transport layer. We've deployed a lot of those systems working today.

And so we're in a very good position for this other kind of capability that they're looking for. I can't say too much beyond that just because I want to be careful that I'm not saying anything that I didn't. But I do anticipate that there will be more information about those released in the in the coming weeks.

Chris or Brian, I'm not sure where we are with kind of cheering guidance on the top.

Yeah, I can take that one. You know, it's a couple of different pieces here. You know, as I talked about in our in the open prepared remarks, you know, we do think the gross profit margin is going to hang in there around the mid 20% range. And so as you're thinking about that relative to to even certainly taking a factor of around that times the reduction in revenue. I think that would get you directionally where you might want to be on the either side.

Yeah, I can take that. I mean, certainly, you know, between the supply chain pushing out as well as the new revenue. I mean, those things are about equal in terms of how they are. So, you know, there, it's, it's more or less a push between the supply chain and the new revenue coming in. But I, you know, we haven't provided any additional color on on that at this point.

You know, at this point with with the contract award environment that Dirk was talking about and awards are coming out, you know, literally right before we get on to this call. I don't think we're prepared yet to start talking about where 27 margins would come in nonetheless on the revenue side either.

Yeah, sure. Thanks, Ryan.

Sure. Absolutely. So I would view this more as, you know, hey, how can an inventory potentially increase P win and increase delivery. So, yes, we're proceeding forward. Part of the IPO was to to raise some capital to support inventory. We are pretty far along in our production capacity and are in the technology, you know, technology maturity. And so we're in the fortunate position that we can do inventory ahead. And so we've begun that process. The nice part is that as we are progressing through it, these IDIQs and task orders, we now can kind of bucket those into our inventory orders. And so we might now we're starting to have the ability where we're asked for a task order.

Our delivery time can be slightly shorter because we already ordered those materials. So we're definitely seeing the benefits as far as our delivery timeline capability, you know, in contrast to some of our competitors who would need to start from scratch. So we're definitely seeing some upside there. We are definitely allocating from inventory already towards some of these programs that we've won. And then we can obviously choose to invest more on the back end of that inventory. So, as far as recognizing schedule delivery and also putting it as in a good position to have good P win, the inventory capability has been extraordinary helpful.

And so that has been so far very successful. And so we're happy to see that. We'll continue to support that. As far as the ultimate acquisition, look, we're on the other side of it now, which I'm very fortunate to say, you know, it's a very amazing capability. And very good demand. So, you know, we alluded to in the earnings deck that, you know, they're getting new contract wins now for more terminals.

Those systems are starting starting to proliferate across the man systems. But what I'm really interested in, and I talked to this a little bit earlier as well, is the unmanned proliferation. So, you know, I think there's at this point, no doubt at all, that unmanned systems are going to play a giant part in the future of warfare and basically the future of everything. And so, assured communications, i. e. communications that is not jammed, like we're seeing in Ukraine and Iran and everywhere else, is going to be extraordinarily important. And that's really what that all space terminal enables is assured communication in denied environments, and also GPS capability as well in denied environments. And that's really going to be the key to leveraging unmanned systems.

So, a long way of saying they've continued to win new new programs and new contracts, which obviously we're very happy about. And we're working now to start to integrate those across unmanned systems, which I think has tremendous growth potential for us in the next two to three year time frame.

Brian, you can comment on that one.

Yes, we've included, actually we've not included the all space backlog in our number because our number was as of June 30, but we'll be updating that into into Q3. So, we'll be a small increase related to all space backlog when we when we report Q3.

Sure. So, I will, I will speak to it generally, because a lot of times those commercial companies in particular are very particular about what specific that they are doing. So, I'll talk about it very generally. There's a wide range of capability there. You know, one of the sample cases that could be worked or is in that pipeline is Earth observation.

Obviously, that fills a giant giant swath of capabilities, but there's visible imagery, there's synthetic aperture radar imagery, there's infrared, and those are increasingly being demanded by the government to be bought commercially, but then also on the commercial side of things as well. And so that's obviously a tremendous growth area for us as we have capabilities in all those areas.

Other areas that we're seeing are things that used to be government provided capabilities that the government really, at this point, no longer really needs to do anymore and could shift that to commercial. So, as an example, right, so commercial services to the International Space Station used to be something that NASA and the government did. But as technology developed, you know, became apparent that we don't need to do this. We can buy this as a service from the commercial market. Now that you had SpaceX and Boeing in contracts to serve the ISS.

That's a similar model to what I think we will see for future growth in the commercial side of things where there's things like more precise GPS capability is something that's being demanded by the government, but also very strong demand on the government side of things. And that can be converted to commercial service. Other examples might be, I don't know, things like weather is another area where that might have been performed by government agencies. And so that can definitely be done by commercial companies now. So, these kind of two buckets. One is your traditional old Earth observation, which that market has been continuing to grow for a long time. Government and commercial markets are good customers of those.

And then the other bucket is things that historically were government capabilities, you know, precise GPS, things like that. We can see the government shifting into commercial markets as well and buying that as a service.

So those are a few different examples of apologies. I can't get more specific.

I think it's largely similar, but Brian, I don't know if you wanted to add more context of the ways I can.

Yeah, I mean, it's a little bit lower, but then what we see on some of the government ones, but, you know, I don't know that it'd be enough, particularly in the overall revenue mix to call it out that much.

Yeah, so I just wanted to thank everyone for taking the time to hear the story. I look forward to speaking with you all next quarter.

This concludes today's call. Thank you for attending. You may now disconnect.