York Space Systems Q2 Earnings Call Highlights

York Space Systems NYSE: YSS reported second-quarter revenue growth and improved margins while lowering its full-year revenue outlook, citing a shift in government procurement toward IDIQ contracts and supply-chain delays that are pushing some revenue into 2027.

Revenue for the second quarter of 2026 was $92.5 million, up 10% from the prior-year period. Chief Accounting Officer and interim CFO Brian Frantz said the increase was driven primarily by acquisitions completed during the second half of 2025 and first half of 2026, along with a new commercial contract announced earlier this year. Revenue from the company’s major government programs was relatively flat year over year.

The company revised its 2026 revenue guidance to a range of $375 million to $405 million, compared with a prior midpoint of $570 million. The new midpoint of $390 million is $180 million below the previous midpoint.

Guidance Cut Reflects Contract Timing and Supply Chain

CEO Dirk Wallinger said the U.S. government has shifted from issuing a rapid succession of larger requests for proposals toward an IDIQ, or indefinite-delivery, indefinite-quantity, acquisition model. While initial IDIQ awards may take longer, he said task orders can be issued more quickly once the contract vehicles are in place.

Frantz said roughly 30% of the prior revenue-guidance midpoint had depended on new business. York removed that anticipated new business from its outlook for the remainder of 2026 because of the changed award environment. He added that supply-chain issues are also delaying revenue into 2027, partly offset by revenue contributions from recent acquisitions.

During the question-and-answer session, Frantz said the impact from supply-chain delays and the removal of expected new revenue were “about equal” in the guidance revision. The company did not identify specific suppliers or satellite programs affected by the supply-chain issues.

Wallinger said York has won eight contracts in 2026, with an 88% proposal win rate. He said the company expects the newer IDIQ awards to support growth in 2027 as follow-on task orders and larger operational programs advance.

As of June 30, York’s backlog was $592 million, down 8% sequentially from $642 million at the end of the first quarter but up 9% from the beginning of the year. The company reported potential unawarded contracts of $1.85 billion and an identified pipeline exceeding $11.5 billion. Wallinger said the identified pipeline consists of specific opportunities York can pursue with its current capabilities and does not require additional acquisitions.

Margins Improved, but Operating Costs Rose

Second-quarter gross margin was 24%, compared with 11% in the prior-year quarter, which had been affected by an estimate-at-completion adjustment. Gross profit rose to $22.2 million from $9.5 million a year earlier.

Contribution margin expanded 18 percentage points to 42%, while contribution margin dollars nearly doubled to $39.3 million from $20.3 million. Frantz attributed the improvement to a more favorable mix of newer programs, which he said generally carry higher margins, and to the transition of the Tranche 1 Transport Layer program into post-launch operations and support work.

York expects gross margin to remain in the mid-20% range for the balance of 2026. Frantz said the company was not prepared to provide outlook details for 2027 revenue or margins.

SG&A and research-and-development expenses rose 52% year over year, reflecting higher headcount, costs associated with being a public company, and expenses from acquisitions including ATLAS, Orbion and Solestial. Frantz said most of York’s public-company infrastructure buildout is complete, although expenses will rise in the second half following the July acquisition of ALL.SPACE.

Adjusted EBITDA was a loss of $9.5 million, compared with a loss of $8.9 million in the prior-year period, as increased operating expenses offset higher gross-margin profitability. Frantz said lower revenue guidance and the Solestial and ALL.SPACE acquisitions will further pressure adjusted EBITDA in the second half.

York ended the quarter with $534 million in cash and cash equivalents and a fully available $150 million revolving credit facility, for total liquidity of $684 million. The company used $155 million of cash after quarter-end to complete its ALL.SPACE acquisition.

Satellite Launches and Acquisitions Expand Capabilities

York launched 21 satellites during the quarter on a dedicated Falcon 9 mission, completing deliveries for the Tranche 1 Transport Layer program. Wallinger said York has now launched 55 satellites across eight launches and has deployed 42 Tranche 1 Transport Layer satellites, all of which are in orbit and healthy.

The company said it is operating five mission sets and three constellations. York also said its Nemesis mission completed its Delta Critical Design Review and remains on track for fourth-quarter delivery, while the Dragoon program completed its initial mission objectives.

York completed acquisitions of Solestial, a provider of space solar technology, and ALL.SPACE, a supplier of assured communications terminals. Wallinger said Solestial gives York domestic control of a supply-chain element that is currently controlled by China, while ALL.SPACE expands the company’s presence in communications terminals for manned and unmanned systems.

ALL.SPACE has contracts with the U.S. Army and Navy, as well as a new Defense Innovation Unit contract and a $6 million Navy follow-on order for 23 additional terminals, according to Wallinger. York expects ALL.SPACE and its other subsidiaries to contribute about 10% to 15% of 2026 revenue. ALL.SPACE backlog was not included in York’s June 30 backlog figure and will be reflected in the company’s third-quarter update, Frantz said.

York was also selected in July for the U.S. Space Force’s NITE-STAR IDIQ, which enables it to compete for task orders involving satellite platforms and the ground network operated by its ATLAS Space Operations subsidiary.

About York Space Systems (NYSE:YSS)

York Space Systems is a leading, U.S.-based, space and defense prime(1) providing a comprehensive suite of mission-critical solutions for national security, government and commercial customers. York is one of the only space and defense primes with proprietary hardware and software capabilities designed to address customers' complex mission requirements across the critical elements of the entire space ecosystem throughout the mission lifecycle. York is the number one provider to the U.S. Department of Defense's (“DoD”) Proliferated Warfighter Space Architecture (“PWSA”) by number of spacecraft operating in-orbit, by number of contracts, and by variety of contract types as of September 2025.

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