Innovative Aerosystems, Inc.

Greetings. Welcome to the Innovative AeroSystems second quarter fiscal year 2026 result conference call. At this time, all participants are in listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star-0 on your telephone keypad. Please note that the conference is being recorded. At this time, I'll turn the conference over to Paul Bartoli, partner at Valens Advisors. Thank you, Paul. You may now begin.

Thank you. Good morning, everyone, and welcome to Innovative Aerosystems' second quarter fiscal 2026 results conference call. Leading the call today are our CEO, Sharon Mashkapoor, and CFO, Jeff DiGiovanni. This morning, we issued a press release detailing our fiscal 2026 second quarter operational and financial results. This release is publicly available in the investor relations section of our corporate website at www.iascorp.com. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest reports filed with the SEC. Additionally, please note that you can find reconciliations of all historical non-GAAP financial measures mentioned on this call in the press release issued this morning. Today's call will begin with prepared remarks from Sheram, who will provide a review of our recent business performance and an update on our strategic framework, followed by a financial update from Jeff. At the conclusion of these prepared remarks, we will open the line for your questions. And with that, I'll turn the call over to Sheram.

Thank you, Paul, and good morning to everyone joining us on the call today. Our positive business momentum carried into the second quarter as we reported another strong result highlighted by significant organic growth in our commercial aerospace and business aviation markets, continued strength in bookings, strong margin realization, and efficient free cash flow conversion. We were able to deliver second quarter modest organic growth driven by growth of approximately 50% in our commercial and business aviation markets, despite an unfavorable comparison to the second quarter of 2025. As a reminder, we faced an unfavorable comparison to last year due to the transition of the F-16 manufacturing to our facility in Exeter. Our F-16 revenues in the second quarter of 2025 were elevated as deliveries to Lockheed were accelerated to buffer them during the transition-related manufacturing hiatus, resulting in a $7 million year-over-year decline in F-16 revenues. We anticipated lower F-16 revenues due to the IPTG-required approvals and therefore shifted the mix of our operation to be more commercial-centric in our commercial aftermarket sales together with increasing volumes in business aviation. We continue to make important progress under our IA next long-term value creation strategy during the second quarter, highlighted by three new acquisitions during the quarter that further expand our base of recurring high-value aftermarket and OEM revenue across legacy and next-generation aviation platforms. Together, these transactions are projected to contribute $10 million in annual revenue with a blended gross margin profile of approximately 50%, putting us another step closer to delivering on our $250 million annual revenue target. In February, we acquired the EdTech Autopilot product line from MOOC. This was an important transaction as it brought us an established autopilot solution to integrate into our avionics cockpit solution. This was one of the key products missing in our integrated cockpit avionics platform. We could have built this on our own. but the solution from Moog gives us a recognized and trusted product. This was followed in March with the acquisition of several product lines from Honeywell. In addition to navigation radios, multifunction displays, transponder technologies, and power generation, this transaction importantly included additional autopilot solutions. Coupled with the Moog autopilot, Together, these autopilot platforms significantly enhance our integrated cockpit solution and accelerate our ability to deliver autonomous solutions to our customers for both the military and commercial markets. In aggregate, the autopilot product line acquisitions recently established us as a major supplier of aircraft autopilots with certified and fielded solutions that range from small general aviation aircraft all the way to large part 25 platforms, including helicopters for both military and commercial markets. These solutions will also be integrated into our UMS platform and Liberty flight deck. Our full suite of avionics solutions now include advanced flight deck and mission systems, precise flight and navigation computers, autoflowers, flight control computers, mission computers, navigation and communication radios, transponders, audio systems, electrical power generation systems, and proprietary software technologies targeting autonomous flight. This is an important milestone fulfilling the company's ongoing strategy, to build a comprehensive avionics ecosystem that bridges legacy platform sustainment with next-generation capability development, ensuring operators can maximize aircraft availability, safety, and long-term value. As with the past transactions, these acquisitions expand our reach into new customers and platforms as well as provide an opportunity to re-engineer these products and integrate them into our existing solutions to offer to new potential customers in military, business aviation, and commercial air transport sectors. Our acquisition funnel remains robust and we see additional opportunities as we continue to execute on our strategic growth initiatives. This quarter, provided clear evidence that our strategy is working as we saw the benefits of both acquisitions and strong organic growth driven by internal investments in new product development. We will remain disciplined in our approach, continuing to focus on transactions and investments that advance our strategic objectives. I also wanted to provide a quick update on integration of our products in support of the F-16 program. As we discussed last quarter, we completed all required recertifications and resumed full-scale production of the digital flight control computer at our Exxon facility. The recertification and resumption of production of the improved programmable display generator is also now complete. We are excited to be fully up and running on these products, and we continue to be optimistic regarding the long-term growth potential of this platform. The F-16 remains a critical asset for our military as well as many of our allies around the world. Additionally, we remain encouraged by the growth potential for our broader defense business. as we experience significant level of inquiries for cockpit upgrades and new aircraft platforms. As such, in the current political climate, we are even more encouraged by the long runway of growth we see ahead. We have made significant investments to position our business as a mission-critical partner with the defense supply chain and believe that we stand to benefit given the strong backdrop for defense spending. At a product level, we continue to move closer to delivering the new version of our UMS platform. We expect deliveries to ramp up through the year and remain excited for the potential of our new UMS platform and our Liberty flight deck. We continue to make significant investments in internal research and development, as we continue to advance our progress towards autonomous flight through our next generation flight deck, Liberty, which employs our UMS system. Our next generation UMS system is an advanced aircraft systems management platform designed to monitor and control multiple aircraft subsystems, from flight controls to environmental and power systems. in a unified intelligent architecture. In summary, we were pleased with our strong second quarter results that further built on our recent strong performance. We remain encouraged by the growth outlook for our business, supported by strength across our key end markets, momentum for our new products, and an active acquisition pipeline. We remain committed to our strategic priorities with an ongoing focus on maximizing long-term value for our shareholders. With that, I'll turn the call over to Jeff for his prepared remarks.