AEVEX Aerospace Inc. (NYSE: AEVEX) posted a 28% year-over-year revenue increase to $420 million in the second quarter of 2026, beating analyst estimates of $405 million, according to a transcript of its earnings call released on Tuesday. The defense contractor attributed the growth to higher demand for military electronics and unmanned systems, particularly from U.S. government contracts.
Despite the revenue beat, AEVEX shares fell 3.2% to $58.50 in after-hours trading as executives warned of rising input costs and supply chain bottlenecks. Chief Financial Officer Lisa Chen highlighted that gross margins narrowed to 22.1% from 25.4% in the same quarter last year, citing inflation-driven increases in raw material and labor expenses.
The company maintained its full-year 2026 revenue guidance of $1.6 billion to $1.65 billion, though it trimmed its adjusted earnings per share (EPS) forecast to $3.10-$3.25 from $3.20-$3.35, reflecting the margin squeeze. CEO Mark Reynolds emphasized continued investment in R&D for next-generation defense technologies, including AI-driven surveillance platforms.
Analysts at Jefferies reiterated a hold rating on AEVEX, citing valuation concerns despite the strong revenue performance. "The revenue beat is encouraging, but the margin compression and lower EPS guidance underscore the cost pressures facing the defense sector," said analyst Daniel Park.
AEVEX has reported three consecutive quarters of revenue growth, driven by sustained defense spending amid geopolitical tensions. The company’s backlog stood at $2.1 billion as of June 30, up from $1.9 billion at the end of Q1 2026.
