YSS

Hello, everyone. Thank you for joining us, and welcome to York Space Systems' Q1 2026 earnings call. After today's prepared remarks, we will host a question and answer session. I will now hand the call over to Christopher Evenden, Vice President of Investor Relations. Please go ahead.

Hello, everyone, and welcome to York Space Systems' Q1 2026 earnings call. With me on the line are Dirk Wallinger, our CEO, and Kevin Messerle, our CFO. Please note that our earnings press release is available at ir.yorkspacesystems.com. In addition, we have posted an earnings presentation to accompany our prepared remarks on the same website. Lastly, after the call, we will post a transcript of our prepared remarks and an audio replay of this call. For those listening to the rebroadcast of this call, we remind you that the remarks made herein are as of today, Thursday, 14th May 2026, and have not been updated subsequent to this call. During this call, we will refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP 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, growth prospects, backlog, growth of market share and addressable market, M&A strategy, inventory building, and the benefits of the acquisitions of Orbion and ALL.SPACE. 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 10-K, the Q1 Form 10-Q, 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 Dirk.

Hello, welcome to York's Q1 2026 earnings call. I appreciate you taking the time to join us. Q1 marked a strong and focused start to the year, reflecting disciplined execution against our strategic priorities and the momentum established through our successful January IPO. We delivered revenue of $116 million, up 9% year-on-year, while also adding meaningful commercial and government awards in the quarter, strengthening our backlog and positioning us for continued growth. We also advanced key strategic initiatives, including the acquisition of Orbion to enhance vertical integration and production delivery times and early steps to build out our inventory in support of future demand. In February, we finalized a $187 million commercial contract for a 20-plus satellite constellation built on the M-CLASS platform with a clear pathway for additional orders as the customer continues to build out its constellation.

We have since completed our kickoff with the customer and begun early design work. We expect significant revenue contribution from this program in 2027. In March, we shared that York won multiple IDIQ awards supporting next-generation national security space architectures. These awards reinforce the continued confidence government customers place in York's mature production line. The IDIQs will support the development and deployment of critical national defense and war-fighting space capabilities, including systems relevant to emerging highly integrated systems that contribute to missions like Golden Dome. We expect task order issuances on the awarded contracts in the near term and are well-positioned to compete, win, and execute on such orders. We also saw continued growth with our civil government customers, including NASA, where we secured an extension to the PEX contract through 2027.

We are seeing strong new business activity across government, classified, and commercial markets, our business development team is fully engaged and at full capacity across this pipeline. Turning to capital allocation, the IPO has expanded our ability to invest in advancing our first-mover advantage. We have scaled our business development organization, adding capabilities across key markets, including Washington, D.C., Colorado, California, and Florida. In parallel, we are investing in inventory, initiating the build-out of the first 20 satellite platforms, allowing us to potentially reduce time to orbit by up to 75% to meet the rapid delivery demand signals from the market. The IPO also enabled us to accelerate our M&A strategy, which we are executing with the acquisition of Orbion Space Technology in Q1 and the signing of ALL.SPACE in April.

As I highlighted in our last earnings call, Orbion strengthens our supply chain control and further integrates critical systems with flight-proven technology. We are seeing strong alignment and execution across the York and Orbion teams and are enthusiastic about the ability to contribute to accelerating our delivery timelines while operating successfully as a wholly-owned subsidiary. ALL.SPACE develops and manufactures next-generation, robust, jam-resistant, multi-band mobile tactical terminals for satellite communications. Their Hydra Terminal systems provide resilient network-agnostic communications on the move, enabling reliable connectivity across space, air, land, and maritime domains designed specifically to ensure connectivity is maintained in dynamic and contested environments. With this acquisition, York expects to advance its strategy to build and complete communication ecosystems operating in contested environments across the commercial and government networks.

It will also further position us to expand into adjacent high-growth addressable markets, particularly the rapidly growing unmanned systems market, by leveraging our space-based network. Together, York and ALL.SPACE bring complementary proven capabilities to enable real-time access to critical information and improve awareness, coordination, and mission execution across distributed operations. ALL.SPACE brings an established and highly credible platform with a track record of execution across critical defense programs and a strong base of existing customers. Upon closing, the business will continue to operate as a wholly-owned subsidiary, maintaining its focus and agility while contributing to York's broader strategic objectives. ALL.SPACE has demonstrated success supporting the U.S. Army and U.S. Navy, including through the Next Generation Tactical Terminal and satellite terminal non-geostationary programs, reinforcing its position as a trusted provider of resilient communication solutions.

These relationships not only validate the strength of the platform, but also expand York's opportunity to deepen engagement across key defense customers. We see significant opportunity to scale into the mobile manned and rapidly growing unmanned systems market through our combined space-based network and mobile ground terminals, where demand for resilient on-the-move connectivity is accelerating. As we have seen in current conflicts, assured connectivity in contested environments continues to present significant challenges. ALL.SPACE is a leader in providing multi-band assured communication in contested environments. This acquisition positions us well to capitalize on that opportunity, particularly as evolving geopolitical dynamics continue to drive increased reliance on unmanned and distributed systems in contested environments. The acquisition is expected to close in the third quarter, subject to regulatory approvals.

Looking ahead, we will continue to pursue strategic acquisitions across 2 primary lanes: assuring supply chain and vertical integration, and leveraging our space domain expertise to continue to expand into rapidly growing adjacent markets, further growing our TAM. Let me close by reinforcing that York is well-positioned as we move into the H2 of 2026. We are deliberately investing to build inventory and reduce delivery timelines by up to 75%, expanding portfolio capabilities like the ATLAS ground network, and continuing to expand our broad customer base. At the same time, we are leveraging our capital to execute a disciplined M&A strategy to strengthen our ability to deliver at speed, cost, and scale, while also expanding our total addressable market by leveraging our space expertise to expand in adjacent high-growth segments.

Together, these efforts position York to capture significant opportunities emerging across an increasingly dynamic and contested global landscape. With that, I'll hand the call over to Kevin.

Thanks, Dirk. As Dirk discussed, 2026 is set to be a transformational year for us, with our January IPO opening several new avenues of growth. Revenue for the quarter was ahead of our expectations at $116.3 million, up $10.1 million or 9% on the prior year. The increase was primarily driven by growth in our major government programs, offset by a strong performance in Q1 last year as we accelerated production of our first 21 Tranche 1 Transport Layer communication satellites ahead of their launch last September. Gross margin, which includes allocated labor, overheads, and D&A, was 19%, down 4 percentage points year on year, driven by the net impact of certain EAC adjustments, which were a tailwind last year and a headwind this year, and a non-recurring depreciation expense this year.

Gross margin dollars were $22.2 million in the quarter, down slightly from $24.6 million in the year-ago quarter, driven by the items I just mentioned, offset by higher revenues. Contribution margin grew 1 percentage point to 34% in the Q1, driven by a richer mix of our newer vintage programs, which tend to have higher margins than our older vintage programs. Contribution margin dollars grew to $40.1 million from $35.3 million last year, driven by the aforementioned mix and higher overall revenues. Turning to operating expenses, SG&A plus R&D expenses increased 35% year-over-year. This was primarily driven by an increase in overall headcount at York, increases in overhead related to public company uplift, and incremental salaries and costs related to the acquisitions of ATLAS in August 2025 and Orbion in March 2026.

As a result, adjusted EBITDA for the quarter was negative $3.6 million compared to $5.5 million last year. With regards to liquidity, as of 31 March 2026, our cash and cash equivalents were $655.7 million, and availability under our revolving facility was $150 million for total liquidity of $805.7 million. Loss per share was $1.51 per quarter. Approximately $1.07 of this is due to two substantial non-recurring non-cash charges associated with the IPO. Capital expenditures for Q1 2026 were $2.1 million as compared to $1.2 million in the year ago quarter.

Backlog has increased 18% to $642.3 million at quarter end from $542.6 million at 31 December 2025, driven by the commercial win we announced in March, partially offset by revenue recognized in the quarter. Looking ahead, we expect revenue for the year to be in the range of $545 million to $595 million, up 48% year-over-year at the midpoint. This is unchanged from our previous guidance. The recent changes at SDA have not reduced our nation's need for communications in contested environments. We continue to compete for that business based on the strengths we've shown in the past.

With regards to Q2 in particular, I would note that we are experiencing delays in supply of certain components that will push a portion of revenue associated with those costs into the H2 of the year. We believe these near-term headwinds are balanced by the unprecedented bid activity in other areas, netting out to an unchanged forecast for the full year. Now I'll hand it back over to the operator for questions. Operator?

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.We ask that you pick up your handset when asking a question, and if you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Peter Arment from Baird. Your line is open. Please go ahead.

Hey, thanks. Good afternoon, Dirk, Kevin, Chris. Thanks for your time. Hey, hey, Dirk. Thank you're in a position to kind of clear things up and help, I guess, investors try to understand a lot of the moving parts that have really been going on in the Space Development Agency. You know, since justification books have come out and There's been a lot kind of thrown out there, how do you view kind of the positioning, if anything's changed for you? Just maybe if you could just. I know some of this, obviously a lot of this is restricted and classified, but what you can give us kind of at a high level on how you're viewing it. Thanks.

Sure thing. Sure thing. Good to hear from you, Peter. Appreciate the question. Yeah, I mean, it presents a real opportunity for us to clarify a lot, 'cause since, quite frankly, I mean, there's a little bit of confusion out there, right? You know, last earnings call, I think you'll recall that there were some questions about Transport Layer and how that might relate to Space Data Network. In that call, we suggested that, or I suggested that more than likely what we expected to see is that the Transport Layer capabilities, right, you know, the ability to support the warfighter in theater and in domain was an enduring need. Independent of what the agency, you know, what agency or where that, you know, kind of need fell under that, it would endure and would continue.

We're happy to see that that's pretty much exactly what happened. The transport kind of capability where, you know, you have this assured communications, and you're gonna able to provide that directly to the warfighter, right? Is a capability that continues to exist, and we're seeing that rolled into the Space Data Network. There's a lot of confusion. You know, I've talked to the government about this and they acknowledge this, and they're doing a lot of work to clarify. There's a lot of confusion because, you know, last year or the year before, you're hearing a lot of things about MILNET, things like that, right? What they're doing though is exactly what I said.

They're bringing all the different kinds of capabilities that you need from military commercial solution, and they're gonna put it under one architecture, and that architecture is called the Space Data Network. I think because before there was an assumption that SpaceX, you know, was sole source MILNET, people believed that that was, you know, gonna perpetuate and that all of Space Data Network would become, quote-unquote, "MILNET," and that's just not accurate. You see that reflected in the budget. You know, if you look at the 2027 Department of War mandatory budget, you see some line items, and you definitely see a Space Data Network backbone at, you know, roughly $3 billion.

What you also see is Space Data Network backbone, quote, "multiple vendor procurement." That's a separate line item from Space Data Network, which means this is for other vendors to compete for that backbone. Obviously, that's very encouraging to see a specific line item specifically for competition at $800 million. Congress has also been really supportive of more competition and understanding that that's critical to having a strong industrial base in the U.S. If that continues, we believe, York believes there's opportunity for material expansion into the $685 million for Space Data Network mesh and ground architectures. With those two alone, you're looking at about, York's opportunity at about $1.5 billion.

To put that into context, when we were looking at budgets before, you know, earlier kind of end part of last year, you'd see, you know, $200 million, $400 million, as high as $500 million for transport. What we're seeing now is that in the new architecture under Space Data Network, we're seeing that opportunity more than tripled. Obviously that's all, you know, very promising for us. We're very encouraged to see that. We like to see budgets for things where we are a key contributor triple, so that's great. Another thing to add is there also seems to be a little bit of confusion on kind of where York fits in the ecosystem and what our capabilities are.

Obviously, for obvious reasons, there's a lot of focus on Transport because it was an unclassified program for the most part, as far as, you know, what it was asked to do. But we're seeing now that, there's very large budgets elsewhere. That's why I'm pointing to our other capabilities because, you know, right now we are under contract for seven different mission sets that are not Space Data Network. Right now we are executing advanced fire control, Moving Target Indicator, remote proximity operations, tracking data relay, advanced waveforms, weather, and IDS, right? Those are all capabilities across the entire ecosystem, from classified programs over to Golden Dome programs, right? When you look at the capabilities York has, obviously we have tremendous capabilities in SDN. Seeing that budget triple is phenomenal.

If you look at the classified side, we estimate the classified budget to be about $20.9 billion. It does have some overlap with the $17.5 billion for Golden Dome. Right now, we're tracking dozens of specific opportunities across 5 different classified mission areas. We also estimate our total opportunity is roughly about $16.3 billion. We obviously feel we're well positioned for the unclassified $8 billion allocated to Moving Target Indication. When you're looking at the $20 billion for classified, $17 billion for Golden Dome, York looks like we have a targeted area of about $16 billion for work that we can do. That's why those other mission sets matter so much, is because we're the incumbent on a lot of those mission capabilities.

We're doing it now, and we're one of probably only four companies probably in the U.S. that is actually positioned to deliver hundreds of satellites immediately. I kind of, you know, took it a little broad there, Peter, but hopefully, that gives you a little more insight into what this budget actually says and what it actually looks like.

That is really helpful and I think it'll be very much appreciated. Maybe just a quick follow-up. Kevin, you mentioned kind of there's no change in this year's annual guidance, but you did said things are shifting around. Could you just give it a little color what the supply chain issue is for Q2 or is it just a timing thing?

Yeah. Hey, Peter. Good, good question. Yeah, so just to reiterate, we are reaffirming our prior guidance of $545 million to $595 million. What I mentioned in the prepared remarks is that we think a little bit of our Q2 revenue that we were planning to hit in Q2 will just be delayed into Q3, likely Q3, potentially some of that into Q4. It's all a timing thing. It doesn't change the, you know, the overall trajectory for the year. It is related to, you know, I would say a handful of suppliers. You know, I don't wanna, I don't wanna publicly announce, you know, or who that might be.

You know, we're obviously, you know, we value our supply chain. Look, they're working on some challenging things for us in some instances. That's what's causing that, right? 'Cause we recognize revenue on a percentage of completion. Some of the development and the production status on certain of our purchase orders gets a little bit delayed. All that means is that revenue just kind of moves a little bit to the right in the year. I would say directionally, Peter, you know, one way to look at it, you know, although we don't guide quarterly revenue, you know, we anticipate Q2 2026 could be roughly flat year-over-year from Q2 2025.

Again, just a little bit of softness there, but it's all just kind of moving to the right.

Thanks, gentlemen. Very helpful color. I'll jump back in queue.

Your next question comes from the line of Austin Moeller from Canaccord Genuity. Your line is open. Please go ahead.

Hi, good afternoon, Dirk and Kevin. First, could you just provide a little bit more color on the national security IDIQs? I think you hinted that it's somewhat related to Golden Dome or potentially, the Space Data Network solicitations in the J book. Would love any more detail on that.

Yeah, no, I appreciate that. Yeah, there's, you know, IDIQs are to a lot of other folks, you know, it's good for us to clarify that a little bit. There was some confusion that, you know, we kinda understood a little bit in the sense of there are a couple IDIQs that are for Golden Dome. They're on the unclassified side of things, you know, there's a lot of people on them, right? It's, you know, 20, 40 people, I think 100 or something like that, in one case. People were confusing that with the IDIQs I was talking about. Now to be clear, we are on those other IDIQs, we're awardees there too, but we made no announcement about that.

The two that I was referencing are basically they're both for national security needs, so I'm not allowed to talk about the actual kind of mission set, but they were very selective. That's why we were excited about it, and that's why you heard me mention it last earnings call, and there was a press release as well, is because they were extraordinarily selective about who they awarded to. It was a very small handful on both of those IDIQs. All the awardees on there were, you know, basically had a long storied history of successful execution in orbit and have the ability to produce at scale.

Both of those IDIQs, while I can't name what the mission sets are, I can say that they are both operational mission sets, meaning that they are for capabilities the government fields right now, in very large quantities. Being onboarded to both those IDIQs is obviously very exciting because it goes along the lines of we can see now the overall theme of what the government has been doing is there's been a lot of frustration with, you know, what's going on with Golden Dome, what's going on with Space Data Network, et cetera. We can see now that what the government is doing has been putting contract vehicles in place with the vendors they think that can actually perform on these contracts and actually execute. That takes a lot of work for the government.

That's still an area where we're not as fast as we probably need to be. They've been working the last couple quarters to get these contract awards in place. I, you know, anticipate a large series of task orders coming out on both those IDIQs over the next couple months. I can say that, you know, our business development team has been very busy responding to task order requests. We've actually signed off on doubling our classified space, facility space as well. Very exciting because they're operational missions. They were for a handful of people, not the hundreds that were on the unclassified IDIQ.

I wish I could tell you more about the mission, but hopefully that gives you a little bit more insight that, you know, these are kind of real deal IDIQs. They're very exciting for us.

Okay. You already discussed this at length, I guess just to reiterate, if you can, you would think that on future contracts or program solicitations for Space Data Network, MILNET, et cetera, Transport Layer, that it would be quite unusual for the Space Force, given their model for all the other contract vehicles they have, to sole source to a single vendor for anything, just given its reduction of competitiveness and you don't have a redundant second supplier.

This is my perspective and opinion, so take it for that. I'm in no way speaking on behalf of the government. I think there's kind of two gears going on. One is. Look, we have an immediate need for capability in this country. I think that, you know, given events over the past couple of months, you know, it's only really highlighted that. I do think that, look, if they've been working with suppliers and they've been producing successfully, they're gonna continue to do that. You don't wanna give up on a great supplier and just suddenly shift gears. I do think there's a lot of congressional support and frankly support on the military side of things too that, you know, we need to have a strong industrial base, which means that we need to have multiple suppliers.

I wouldn't take it so far to say that they'll never sole source anything. I think it probably looks more like, "Hey, let's continue to do the things that we're doing that are working. Look, we have a lot of dollars here. Congress has been very supportive of multiple suppliers, so let's try and on-ramp other companies to produce at scale and see what they can do as well." I think it's more like that. I don't think it's quite as discrete. It's more of, you know, 2026 and 2027 and 2028 look like, "Let's get these companies from producing hundreds to producing thousands, and let's invest in multiple suppliers.

That's really helpful. Thanks for the details.

Yeah. Well, I'll add one more comment. You know, stuff like, you know, there was some Starlink terminals that were referenced in the budget. You know, like, yeah, do you need Starlink terminals to work with Starlink? Yes. That's probably a sole source for that one. That was, you know, $25 million of over, I think $3.8 billion when you include launch. I think that's a good example of, look, we'll continue to use things that work. We will only want to expand.

You have ALL.SPACE terminals now, right?

What was that?

You have flat panel antennas from ALL.SPACE now.

We do. That's exactly right. We're very excited about the addition of ALL.SPACE, and obviously we've signed a definitive agreement, and we still have regulatory approvals. Yeah, that's the real capability that ALL.SPACE is bringing, is that it's a multi-beam antenna. I think it has 4 different beams. It can talk to GEO, HEO, LEO, MEO, all of them. What the difference there is that it really provides this assured comm. You notice that York tends to be really focused on tactical capabilities, like in the theater, and that's precisely what the ALL.SPACE capability does, is because it's multi-beam, because it's an electronically steered antenna, it's very hard to jam. It's and it's very hard to basically take it out of communication. We've seen that, right?

We've seen, you know, in the places that we're in nowadays, we're having a, you know, people are having a really hard time with communications, that's what the ALL.SPACE antenna does. In addition, right, you'll notice just generally in the market, there's a lot of focus on unmanned systems, right? Rightfully so. There's a lot of excitement about all the unmanned boats and ships and subs and things like that we want, that we need capability for in the sea, and same thing on the land, right? We're very focused on production right now, what we loved about the ALL.SPACE being added in was that when you have the production and it works, if you can't talk to it, then really it doesn't matter, right?

If they're able to jam your communications, if they're able to jam your GPS, then that's gonna be a major problem. The fundamental design of the ALL.SPACE system is much more robust towards that. That's why it's gonna enable the unmanned systems to work in communication denied environments as well. That's a little bit of a nuance that I think most people didn't get about really the brilliance of what Paul and ALL.SPACE were doing. Coupling that with an assured communication and capabilities backbone in space really gives you that global connectivity that frankly as a, as a country we're gonna need.

Excellent. Thank you.

Your next question comes from the line of Jon Godyn from Citigroup. Please go ahead.

Hey, guys. This is Max on for John. Thanks for taking my question. I was just wondering if you could double-click on the capital allocation strategy a bit. You mentioned, you know, an M&A strategy of investing in growing adjacent markets. I was curious if this is part of the strategy of diversifying away from like the SDN dependency, or it's just like part of like your inorganic growth strategy as a whole. If you can provide some high level color into these rapidly growing adjacent markets. Thanks.

On our, you know, on our earnings and today, we've always talked about there's two really areas that we're gonna look at as the major focus. One of them is supply chain because as Kevin alluded to, you know, there's just a lot of areas where we are highly dependent on China and other countries, and that has to end. Solar cells are one prime example of pretty much everything on solar cells. For space, triple junction type of cells comes from China or places that are unfriendly, and so we need to change that. You know, we had the Orbion acquisition as well. Like, they're a premier supplier of propulsion systems. They're operating phenomenally for us in orbit on numerous missions.

Bringing that kind of high technology capability in, then you know, securing our supply chain from sources who we know will be unfriendly in the future, right? That's important to us. The other piece is, it isn't about you know, diversifying away from SDN. As I kind of alluded to, you know, earlier in the call, you know, we have 8 different mission sets. SDN is 1 of them. But we have 7 other ones. As far as diversity of capabilities, and ability for us to grow in numerous mission markets that are all ripe for proliferation, we feel very good about where we're at from a satellite manufacturing capabilities perspective. The strategy though is more of, look, we provide global connectivity and global solutions. That's what we do. We build autonomous robots in space, right?

They operate for weeks, months, some, you know, could be years on end, right? They have these autonomy and controls and capabilities there, and what we wanna do is leverage that knowledge and experience and help adjacent markets. That's where we saw that by coupling with ALL.SPACE, we could take advantage of the massively growing and expanding unmanned markets. They are already doing phenomenally well in mobile markets. But unmanned markets, we can support that.

By that terminal, being connected to our global system, what it means now is these, all these manufacturers for boats, subs, ships, land vehicles, et cetera, we can offer them a turnkey, assured connectivity and autonomy solution. Yeah, we have a lot of interest that we see that, you know, robots, and everything like that is gonna be important to what the United States is doing in the future. We're making offensive moves right now to try and help that market grow and be successful and execute. Because right now the focus is a lot on manufacturing. The next step is, how do you get these things to work? How do you connect them? How do you make sure that they understand where they're at? How are you coordinating them?

That's where we think that there's lots of opportunity for York to grow because frankly, that's exactly what we do for satellite constellations right now.

Hey, Dirk.

Great. That was helpful.

I'm just gonna add a quick little plug here. In the earnings deck that's posted to the website, there's some really helpful slides we think that will help illustrate what Dirk just talked about as it relates to this whole ALL.SPACE ecosystem. Slides eight, nine, and 10, whenever folks get a chance, I would encourage you to have a look at those slides.

Kevin's piping up 'cause he told me before the call.

Yeah.

You might wanna reference those." Fair. Fair. Good add, Kevin. Thank you.

Great. That was helpful. That is all for me. Thank you.

Your next question comes from the line of Seth Seifman from JPMorgan. Please go ahead.

Okay. Thanks very much, and good afternoon. I wanted to ask about the EACs in the quarter and, you know, what drove the cost growth that led to those, and, you know, whether that's associated at all with the schedule delays you're expecting and whether those delays bring any profitability risk with them.

Yeah, I'll take that one, Dirk. Hey, Seth. Good to hear from you. Yeah. What I would say with the first quarter EAC change, it was negative. There's a kind of a good story behind it, and let me I'll share what I can with it. You know, we have a particular, you know, very important government customer that has a very important mission. There's been, you know, over the past year or two, a little bit of uncertainty on particular technical capabilities. The good news is, in the Q1, you know, our tech teams and the government's tech teams, you know, came to an agreement on what that technical capability should look like.

You know, frankly, it's gonna increase a little bit of material cost and a little bit of labor cost on our side. We felt the right thing to do for this customer and for this mission, which is an extremely important one for our nation, was to absorb that and not get into any, you know, sort of back and forth on, you know, getting a contract mod put in place for this. That's really the punchline on that EAC change. That's about 1 point of the 4 points of margin decline year-over-year is associated to that one-time event. You know, there could be some upside, you know, if we end up accomplishing that below those costs we estimated.

We wanted to put forth a reasonably conservative estimate of what it would take to get this very important mission to the finish line, and we're gonna get it done, and it's gonna be a very important mission. The other thing worth mentioning in the gross margin decline year over year, about 2 points were caused by accelerated depreciation, a non-recurring depreciation charge of a satellite that we had in orbit. It's a hosted payload mission. We don't really do those anymore.

A few years ago, those were some of the missions we were doing where we would own the satellite, take a customer's payload, and then we would operate the satellite and the payload for the customer. We don't do that anymore, but it was a one-time non-recurring depreciation charge related to that particular asset. What I would say, Seth, is that absent those 2 non-recurring events, we actually would've been up slightly year-over-year on a gross margin basis and up sequentially from Q4 on a gross margin basis.

Again, you know, we things that aren't gonna recur again and actually, like I said, that the EAC is actually sort of a good story when you, when you look at what we're doing here for that customer.

Okay. Okay. Excellent. Maybe just one clarification question to follow up. The revenue guide for the year, the unchanged revenue outlook, that's an organic outlook, correct? With no contribution from ALL.SPACE or any other acquisitions.

That's correct, Seth. We're not you know, until we close that deal, we're not gonna be adjusting guidance vis-a-vis ALL.SPACE. We'll take a look at that later in the year.

Okay. Excellent. Thanks very much.

Your next question comes from the line of Sheila Kahyaoglu from Jefferies. Please go ahead.

Hi, guys. This is Kyle on for Sheila. Thanks for taking my question. As it relates to sort of the full year revenue guide, yeah, I'd appreciate, you know, a little bit of color in terms of, you know, sort of what is already in backlog today to get there. You know, you called out some of the timing issues that seemed more near term, but, you know, what is sort of still the go-get or need to win to kind of hit the full year guide?

Kevin, I'll let you go, and then I can add insight onto some of the changing dynamics as far as, you know, revenue recognition and stuff, from the 10,000-foot level.

Sure. You know, if you look at our range of $545 million to $595 million, midpoint of $570 million, you know, as we mentioned on our last call in March, 70% of that is backlog. That has not changed. That, you know, kind of implies obviously, right, that 30% of that $570 million number is, you know, new business. We have chipped away, you know, frankly a little bit on that go-get for the new business that's related to that commercial contract, the $187 million commercial contract that we signed in the Q1. To be clear, it's not a super material number.

Most of that's gonna be 2027 revenue, but it does contribute a little bit to that. That's kind of the high level roadmap. you know, as we talked about on our March call as well, you know, this is consistent with our plan. you know, we were not anticipating any large scale, you know, contract, you know, government contract awards in the first quarter, or frankly, even in the second quarter. We think that is going to be a second half event, and based on the what I would say, robust activity going on with our BD and proposal folks, that's, you know, we still feel very good about that new business go-get. Dirk, I don't know if you have anything you wanna add.

Yeah, I mean, that's one of the dynamics we're seeing, and I alluded to it, you know, on kind of one of the questions, was just that the government, you know, although some folks are a little frustrated with the transparency, but I understand where it's coming from because they've been working very diligently on basically putting all the contract vehicles in. Most of these are IDIQs and OTAs, so other transaction authorities. They competitively compete them an award so that after that, they can just put out task orders and get the dollars to flow.

That's what's pretty different about what's happening kind of today versus this industry for the past, I don't know, decade and a half that I've been working on it, is they're putting all the construction kind of capabilities so that they can let the dollars flow and flow quickly. What we're seeing is a few things. One is the time cycles for award are gonna be a lot shorter because they spent all their time getting people onto contracts, either through OTAs, of which we, I think we have 5 or 6 plus numerous IDIQs, of which I think we also have 5 or 6. What they're doing is issuing task orders so that they can immediately go to execute and issue the dollars.

They're also doing a lot of RFIs that are awardable, which is rare. The process used to be RFI, draft RFP, award, then dollars, right? Now because they have these contract vehicles in place, they're doing RFIs and they're saying, "By the way, we might just award it." There's a significant acceleration of, you know, task orders and dollars issued, and I think in the next quarter or two. The programs themselves are much shorter. You know, historically for us, we're 1 of the faster builders and deployers, but that schedule was typically like 3 years plus. Now they're talking about 2-year schedules. The reason this matters is because, as Kevin alluded to, you know, we typically, you know, basically recognize our revenue as a function of cost.

If the program is shorter, you're recognizing that, they're recognizing that contract value over a much shorter period. You know, contract vehicles are in place. Task orders are coming out. They've significantly shortened the procurement life cycle by awarding contracts ahead. The schedules themselves are significantly shorter as well. In our case, as I alluded to, you know, we're buying inventory, right? We're buying 20 space vehicles of inventory right now. I have another 11 already. What that means is that when you have inventory, we can immediately move it from inventory. When we're awarded a contract, it gets moved immediately over to the program costs, and we can recognize that immediately.

There's also the kind of financial metrics of standing up a large production company like we have, where you're able to shorten these cycles, build inventory, recognize revenue quickly, and shorten these schedules. There's just a tremendous dynamic that's been going on, and it appears, I think, to a lot of folks who aren't familiar with what the government's doing, that, you know, there's not transparency and it just seems like it's dragging on. It actually hasn't. They've been doing a lot of work, and we're starting to see the benefits of that work that they've done. Long way of saying we're gonna be able to recognize the revenue in shorter cycles is how I see it.

Understood. Very, very helpful and very thorough. If I could ask just one on the commercial side with, you know, this large contract from February end. Does that sort of change the construct of what growth could be in that end market? I know you talked about the biz dev teams being very active across the different channels.

We're very excited about that commercial opportunity because it's the first of many constellations that this customer needs. They've been, you know, very successful in the work that they've done on their side of things. I think that there's gonna be tremendous growth on the commercial side of things. We're also working some different avenues to overcome the capital, the upfront capital that's typically required with satellites, Kevin's been doing a little work there too. Commercial side, I see tremendous growth and the ability to leverage our, you know, production line and our production capabilities and our fully developed mission operations software suites is gonna be critical to help unlock and grow the commercial side of the business as well.

Thank you.

Your next question comes from the line of Ryan Koontz from Needham & Company. Please go ahead.

Great. Thanks. I wanted to follow up on ALL.SPACE a bit more. I think, you know, Dirk, can you comment on, you know, the intellectual property and kind of track record of the products, number one. Number two, you know, when do you think that product will be able to, you know, ship in material volumes, and is the supply chain ready or is there a lot of work to do there? Thank you.

Yeah, ALL.SPACE is a, you know, phenomenal company. Their headquarters and their, you know, their technical excellence is based in the U.K., but their production capacity is actually in the U.S. It's not an immature product by any means. They're already, you know, out there deployed and doing exercises. They have contracts with the U.S. Army and U.S. Navy. We'd love to work with them and expand their capability for the U.S. Air Force on the space side of things too, and I think we'll have a lot of success doing it. That terminal obviously is a phenomenal fit for Golden Dome. You know, assured communications that are far more resistant to jamming is definitely required for Golden Dome specifically. They have mass production in Alabama.

I think that we are gonna York is opening an office in Alabama, as I alluded to in the prepared remarks. We're probably gonna expand our footprint in Alabama as well to support the kind of mass production that they're gonna need. I think they're really just the beginning. I mean, right now, you know, it's the military that is the main, you know, source of demand. As I alluded to, you know, as Kevin said, you know, if you look at the slides as well, right, slides I think 9 and 10, what you see is that you need this capability to support unmanned systems at the scale that we are gonna need.

That part actually has me personally the most excited because that's really what you need, is you need these unmanned systems, but you need them out there in hundreds and thousands. The connectivity that ALL.SPACE and York bring together, support that capability and make sure that it's gonna work in the field when you need it.

That's great, Dirk. Thanks so much.

Your next question comes from the line of David Strauss from Wells Fargo. Please go ahead.

Hi, this is Ben Tomik calling for David. I was just wondering if we could go back to the SDA and Transport Layer. For what you already have under contract for Tranche 1 and Tranche 2, is there any update to the launch schedule there? I know there were some delays. Then, from that funding, how much of that has been recognized already?

Oh, yeah. Kevin will talk to the funding piece. The launch schedule's actually controlled, and we need SDA's permission to do that. I think it's probably safe for me to say that the vehicles are very mature and we feel they're ready to ship, but it's up to the SDA to announce exactly when that next launch is scheduled. Kevin, maybe you can answer the other part.

Yeah. On the funding, you know, we can't get into too many details on that. Broadly speaking, you know, we've only received funding, you know, for the both Tranche Two programs, you know, is less than 50%, right? We're in a significant contract asset status, meaning we've incurred more cost, we've recognized more revenue than cash received. That's just a timing thing. It all kind of comes out in the wash.

Got it. Could you provide any update on current build rates and maybe like how progress has been on the Potomac facility?

Yeah. Potomac's coming around really, really quickly. You know, right now, its main function is assembly, integration, and test. They've improved that ability significantly. I mean, you know, at the beginning of, you know, Tranche 1, it took like, I believe, you know, I'm kind of going off the top of my head, but I believe it took roughly a week for us to get through vibration testing through X, Y, and Z axes, and I think today they do it in like a day routinely. We've seen significant improvements there. We're receiving, we're standing up production capability in the sense of like we're starting to receive a lot of that and we're starting in the process of starting some building over at Potomac.

That's kind of a weird way where, you know, a lot of supply chain talks about the satellite hardware and capabilities there, but supply chain definitely affects your ground test equipment, and your, and your mission-specific test equipment as well. We're, we're deploying that now. It'll take a little bit longer, but I think that we'll probably be full capacity by like 2026, as far as, you know, with the goal of trying to achieve, you know, 1,000 a year.

Great. Thank you.

Your next question comes from the line of Mitch Ingles from Raymond James. Please go ahead.

Hey, everyone. I'm on for Brian Gesuale. Congrats on a solid quarter and thanks for all the color. It's been very helpful so far. I just had a quick question. You mentioned you started building the first 20 platforms to accelerate your time to delivery. What is your target inventory level by the end of the year, and how should we think about any potential cash headwind from that and what you expect for revenue recognition as we speed up delivery cadence?

I'm sorry, could you repeat the first part again?

On the, you announced the 20 platform.

that you're building, do you have a target level for that for the end of the year? How much do you wanna accelerate that?

We're building 20 to inventory now, and like I said, we have 11 actually that I think would be we could make available for inventory as well. We basically sized that based on launch vehicles. The M-CLASS is significantly larger, we wanted to basically have a full stack so you could launch an entire rocket. That's where the sizing came from. We have numerous contract opportunities right now where I think there's significant potential to move those platforms over immediately and start integrating payloads. Hypothetically, if we did that on something like some of the LX-CLASS that we have, I mean, we could be recognizing revenue within, you know, 2 or 3 months after contract signing, maybe even earlier. Depending if the payload was ready or not.

If the payload's ready, we've shown that we can complete an entire spacecraft build with a brand new payload integrated, launch it, and be operating in orbit in 7 months. But look, that's very, you know, that's a very aggressive assumption. I would assume that, you know, if we kicked off contracts in I think, you know, Q3, Q4, we'd probably start to recognize revenue in Q4. It would be early kinda Q7, 2027 or, sorry, Q1 2027 as well. We envision those because the inventory will be much shorter. Those programs might only be a year long or a year and a half for us to recognize the full value of the contract.

Awesome. That's helpful. I guess one last one from me on the commercial contract, expected on starting revenues in 2027. How should we think about the cadence for that contract in terms of the timing of it and how long that could last?

Yeah, that's you, Kevin.

Yeah. to be clear, there will be a portion of revenue associated with that contract this year. you know, it's not huge. You know, less than $30 million or so. we think most of it will be in 2027 and 2028. I would think of that program as probably closer to the longer end of some of our programs. you know, probably that when we talk, you know, 2 to 3 years, I'd say that one directionally is probably gonna be on the longer end. There's some pretty innovative payloads that our customer and our CTO are developing.

It's a little bit of a longer program than our traditional as we go forward with these sat com missions for the government. You know, we've been there, done that. Those are gonna be very accelerated cycle programs. This one a little bit longer.

That's it for me. Thank you.

Your next question comes from the line of Alexandra Mandry from Truist Securities. Please go ahead.

Hey, good afternoon, and thanks for taking my question. You mentioned labor earlier, and I just wanted to see if you could provide more color on the labor force and ability to add and retain labor if needed. Thanks.

Yeah, I can talk to that. Right now, we feel very good about where we're sitting as far as labor goes. You know, the vast majority of expertise that are required for our new missions obviously comes from the engineering group and software groups as well. Those are staffed pretty well. You know, most of our missions are starting to launch, which is, you know, the big bulk of their development cycle is typically early in their program. Like a PDR, CDR, which would be kind of the first year of the program. You know, it doesn't completely drop off, but that's where you get most of the work. As you approach launch, it just becomes more software team and the engineering teams free up to work on new programs.

I feel very good about where we're at on the engineering front. I mean, I anticipate, you know, it will grow a little bit. It's definitely, you know, kind of leveling out. Now production's a different story. Production, you know, as we get more contracts and more capability, we're able to leverage, you know, highly skilled technicians that are in the area. We've had a lot of success bringing more technicians on to support, you know, higher and higher numbers of production, but we've also got significantly more efficient as well. You know, we will have to bring on more technicians, you know, as we continue to meet and exceed our projections for, you know, 2027, 2028.

Even on that case, we've done so much work on automating the testing on the ground, and also standardizing on, you know, the bus platform itself and the software that's required to execute and check out that it's really reduced the number of hands required on the satellites as well. Long way of saying, you know, engineering and management we think is, you know, leveling out. I don't see that, you know, being a linear curve going forward as we earn more and more contracts. Technicians, you know, won't quite be linear, there'll be some growth there, more than, you know, 10%. I don't think it's, we require any kinda doubling or anything of that drastic nature at all to support significantly more contracts and production capability.

Great. That's all for me. Thanks.

At this time, there are no further questions. I would like to hand the conference over to Dirk Wallinger for closing remarks.

Really appreciate everyone taking the time to hear the story and allowing us also the opportunity to clarify and add some more understanding of kinda the budgets and where they fit and where we fit. Obviously we're very excited at where the budgets are sitting. We're excited about our ability to deliver. With the number of contract vehicles that we have and the budgets allocated for all the different kinds of capabilities the country needs, we're extremely excited about what's gonna happen here in the next couple of quarters in 2026 and 2027. Obviously very excited about delivering on some of our commercial constellations as well. Really appreciate the time everyone took. Thank you so much, have a good day.

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

Hello, everyone. Thank you for joining us, and welcome to the York Space Systems Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I will now hand the call over to Christopher Evenden, Vice President of Investor Relations. Please go ahead.

Hello, everyone, and welcome to York Space Systems Fourth Quarter and Full Year 2025 Earnings Call. With me on the line are Dirk Wallinger, our CEO; and Kevin Messerle, our CFO. Please note that our earnings press release is available at ir.yorkspacesystems.com. In addition, we have posted an earnings presentation to accompany our prepared remarks on the same website. Lastly, after the call we will post a transcript of our prepared remarks and an audio replay of this call. For those listening to rebroadcast of this call, we remind you that the remarks made herein are as of today, Thursday, March 19, 2026 and have not been updated subsequent to this call. During this call, we will refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP 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 growth prospects, backlog, growth of market share, growth strategy and capabilities and future health of our spacecraft. 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 prospectus filed with the SEC on January 30th, 2026 and in our subsequent reports filed with the SEC including our upcoming annual report on Form 10-K for the year 2025. After the completion of prepared remarks we will open the call for questions. Now I will turn the call over to Dirk.

Thanks, Chris. Hello, and welcome to York's Fourth Quarter and Full Year 2025 Earnings Call. I appreciate you all taking the time, and I'm happy to be speaking with you. 2025 marked an inflection point in our business. We grew revenue by 52% year-over-year, and we exited the year with clear line of sight to profitability in 2026. Kevin will get to the details of that in a moment. Our financial results are a reflection of the business milestones we reached during the year. Given this is our first earnings call, I'll provide some context on how we got here. I founded York in 2012 with one purpose, to disrupt the traditional space industry. At that time, it was an era of multibillion-dollar satellites built over decade-long time lines. And it was clear to me that if the United States continued on this path, we'd lose the second space race to our adversaries. We needed the ability to design, build and deploy large constellations of satellites on significantly accelerated time lines. That meant transforming how we manufacture, launch and operate satellites, shifting from bespoke programs to a fully industrialized model. That's exactly what York was built to do and what we've been executing on since 2012. As the mission prime, we own the full satellite life cycle from design and manufacturing through launch, operations and sustainment. Our multi-platform approach is built around a standardized modular family of spacecraft that range from 200 to more than 2,000 kilograms. We architect our platforms as integrated systems, combining flight-proven hardware with proprietary flight and mission operations software. That integrated software-hardware approach is designed to allow us to seamlessly coordinate across 3 different operation centers, task across our global network of close to 50 antennas and procure and integrate launch services. Executing as the mission prime enables us to monetize the full mission life cycle and maintain control over most of the aspects required to execute our vision. That integrated approach is what has set York apart and what has enabled us to deliver reliably at speed and scale. 2025 saw us deliver on that founding vision. We launched 23 satellites into orbit in 2025 alone. We emerged as a leading provider of the Department of Defense's Proliferated Warfighter Space Architecture, measured by spacecraft on orbit, number of contracts and mission types. We acquired a global ground station network and software-defined operations platform, effectively eliminating ground communication bottlenecks to support our end-to-end mission architecture. And we fine-tuned our industrialized production process with every satellite we build. We've achieved multiple technical feats, including in-plane, cross-vendor and space-to-ground optical laser communications. York demonstrated K-band connectivity, orbit maneuvering and remains the only provider ever to demonstrate Link 16 from space to ground. Together, these demonstrations validate our ability to integrate advanced capabilities into cohesive, secure architectures designed to meet the evolving needs of the warfighter. These milestones reflect years of deliberate execution and sustained intentional investment. From the outset, we've aligned every major decision around enabling the rapid cost-effective production and operation of satellite constellations critical to U.S. mission success. With U.S. government demand accelerating rapidly, we are positioned to deliver at scale. Our IPO strengthened our capital base and operational flexibility, enabling us to accelerate execution and further extend our lead over competitors. Now I'd like to highlight the 2025 achievements that we expect to have the biggest impact on our future. Most significantly, on September 10, we launched 21 satellites for the Department of Defense. This low earth orbit constellation is designed to provide secure, resilient communications and data transport for U.S. and allied warfighters. We delivered our satellites to orbit 1 month ahead of our nearest competitor, and we confirm the health of all spacecraft within hours of launch separation through our own classified mission operations center here in Denver. We are excited about the launch of our second plane of satellites for Tranche 1. These spacecraft were the first operational communication satellites in orbit for the PWSA, and we understand they will play a key role in communications infrastructure, underpinning America's next generation of space-based defense systems. Our multi-platform approach enables us to execute across nearly every Golden Dome mission set, including communications, signals intelligence, remote proximity operations, earth observation, synthetic aperture radar and visible imaging. Our S-CLASS platform launched in 2018 and has flown across multiple missions and constellations, establishing a repeatable flight-proven foundation. We expanded that architecture with our LX-CLASS platform, which shares approximately 80% of its hardware and nearly all of its software with the S-CLASS. That design commonality validated our manufacturing model and reinforces the strength of our integrated hardware and software ecosystem. Building on that foundation, we introduced our largest M-CLASS platform in 2025, extending the same core architecture to support payloads in excess of 8 kilowatts of power. By leveraging the same flight-proven hardware and software stack, M-CLASS enables us to scale into higher power mission sets without redesigning the underlying system. This significantly broadens our addressable market across national security, civil and commercial markets. As part of our plan to continue expanding our share of the market, I am happy to share that we recently finalized $187 million commercial contract for a 20-plus satellite constellation built on the M-CLASS platform. This is our fifth commercial contract and the first constellation of a series of constellations for this customer. Our platform and turnkey ecosystem approach is designed to lower cost, streamline and derisk procurement, accelerate build times and significantly reduce capital intensity. Recognizing that ground infrastructure is foundational to proliferated architectures, we acquired ATLAS Space Operations in the third quarter of 2025. As proliferated constellations scale, ground infrastructure becomes a critical constraint. The pressure is particularly acute when dozens of satellites are deployed simultaneously at launch and require rapid checkout and orbital phasing, as was the case with our numerous constellation launches. By bringing ATLAS into our ecosystem, we expanded our global ground network, reduced dependency on constrained third-party capacity and reinforced our integrated end-to-end mission model, enhancing space-to-ground resilience. ATLAS was essential in enabling us to confirm the health of 21 satellites launched in September quickly. As a wholly owned subsidiary, ATLAS will continue to operate independently under its existing brand, serving its diverse portfolio of customers across the industry. Another key mission in 2025 was Dragoon. Launched in June, Dragoon is notable because we went from contract execution to orbit in just 7 months, a 75% reduction in delivery time line versus a typical 30-month program. York was approached with an identified agency need, and we then reallocated a satellite in production to this mission. We integrated a completely new capability and delivered the spacecraft in orbit successfully. York is probably 1 of maybe 2 providers, which have demonstrated this ability. Another milestone in 2025 was our commercially procured communications mission for NASA, the BARD mission, developed in collaboration with NASA's Space Communications and Navigations Program and the Johns Hopkins Applied Physics Laboratory executed more than 100 on-orbit communication activities. BARD successfully demonstrated forward and return link connectivity to NASA's tracking and data relay satellite system, validating interoperability across multiple commercial K-band relay networks. These demonstrations confirmed the feasibility of seamless roaming between government and commercial communication services. BARD is an important opportunity as a potential pathfinder for modernizing NASA's legacy TDRS architecture into a proliferated LEO network. Such a transition would expand connectivity, reduce latency and enable faster commercial pace technology refresh cycles while preserving compatibility for existing users and unlocking new mission capabilities. We anticipate the BARD mission to be extended to address an expanded series of demonstrations, further showcasing our large customer base and wide mission capabilities. In addition to our mission execution, we also strengthened our strategic position in January by going public. Our decision to go public was grounded in long-term strategy and informed by a clear assessment of market timing and growth trajectory. The capital we've raised provides us flexibility to seek opportunities to grow our TAM through M&A and adjacent market products, grow inventory to provide unmatched scheduled deliveries, expand the manufacturing advantage we currently have over our competitors and scale our network ecosystem. Our recent acquisition of Orbion Space Technologies is a good example of the first point. Orbion is a Michigan-based manufacturer of flight-proven electrical propulsion systems that has already delivered at scale for York missions. Acquiring the company helps us reduce supply chain risk, which improves schedule certainty and enables us to align our technology road maps with the growing constellation scale demands across the sector. Similar to ATLAS, Orbion will continue to operate as a wholly owned U.S. subsidiary of York, serving customers across the broad space industry. Both acquisitions reinforce our deliberate strategy to integrate critical mission capabilities across York Space ecosystem, propulsion, ground operations and end-to-end mission execution. Future M&A may address strategic elements of the supply chain. Some may help us grow our TAM, some may do both. The second use of proceeds will be to build inventory of our satellite platforms. We demonstrated the velocity of our manufacturing process in September by being first to orbit for the PWSA Tranche 1 contract. We demonstrated we can reduce in-orbit delivery by up to 75% with inventoried spacecraft. And we are one of the very few in the industry with proven platforms mature enough in their life cycle to provide this capability. This presents a significant strategic competitive advantage and can also enable us to recognize revenue on accelerated schedules. Our time to orbit was already a differentiator, one we've built through over a decade of manufacturing satellites, but we believe the ability to leverage existing platform inventory provides a step function improvement, further widening the gap between us and our competitors. Demand signals are very encouraging. The government is currently reengaging and the Pentagon is moving quickly to execute their missions. We believe there is a clear understanding across the government that the global threat environment is deteriorating and that investment in space domain awareness, missile defense, connectivity and counter space capabilities are essential to America's security. Proliferated architectures have become the preferred approach for resiliency and fight through capability. We are also seeing a pronounced push to diversify supplier bases in other areas of the market as cost and speed take on greater importance, especially as proliferation is only feasible if satellites can be made affordably enough to deploy in large quantities. York's 2025 performance metrics validate the mission I set when I founded the company. From day 1, our goal has been to serve as a mission prime for proliferated systems. Today, we've built the foundation, scalable satellite manufacturing, a unified software stack across platforms and an integrated space terrestrial ecosystem. Today, York is executing at scale across national security and commercial missions, with 33 satellites currently on orbit, mission operations centers supporting 5 active missions and 2 operational constellations. We are preparing for our eighth launch overall, which will see another 21 York satellites reach orbit on a fully dedicated launch vehicle for the second time. We are executing on our 12th contract and advancing work on our sixth constellation contract, underscoring York's ability to deliver repeated, reliable performance across multiple programs while continuing to scale production and mission execution capacity. York's proven mass production cadence demonstrates its strong competitive advantages, enabling the company to field multiple flight proven platforms with decades of flight heritage, demonstrated on our performance and the ability to deliver fully populated launches at scale. Our latest commercial constellation contract win further demonstrates York's ability to win across numerous markets and customers. For all these reasons, we believe York is well positioned to meet the evolving needs of the United States Government and commercial customers. And with that, I'll hand the call over to Kevin.

Thanks, Dirk. As Dirk said, 2025 was a transformative year for York. By successfully delivering on a broad set of contracts, we were able to significantly grow revenue and take significant strides towards profitability. Revenue for the year was $386.2 million, up $132.7 million or 52% on the prior year. Substantially, all of our revenue derives from long-term fixed firm price contracts and is recognized using a percentage of completion method. We believe this approach most accurately tracks the business and it provides generally a steady progression of revenue throughout a program. Year-on-year growth in revenue was primarily driven by increased completion against 2 of our Transport Layer Tranche 2 contracts. Gross margin percentage, which includes allocated labor, overheads and D&A, was 20%, up 7 percentage points year-on-year, driven by improved mix as newer programs became a larger part of the whole and a reduction in negative EAC adjustments. EAC is estimate at completion and is our estimate of final program costs and margins. We have built cross-functional teams at York that reevaluate these on a program-by-program basis every quarter. Turning to operating expenses. While our revenues increased 52% year-on-year, our SG&A plus R&D expenses only increased 8% for the same period. We also incurred approximately $12.1 million of onetime transaction costs associated with our M&A program as well as IPO-related professional fees. The ability to scale our revenue while tightly controlling expenses is the primary driver of our improvement in adjusted EBITDA from 2024 to 2025, and we expect that trend to continue through 2026. On the operations front, we had 710 employees at the end of the quarter, of whom almost 75% are directly involved in the design and manufacture of satellites or delivery of mission services. Just to touch on our liquidity. As of December 31, 2025, our cash and cash equivalents were $162.6 million and availability under our revolving facility was $150 million for total liquidity of $312.6 million. On January 30, 2026, we completed our IPO of 18.5 million shares of our common stock at a public offering price of $34 per share. We received net proceeds of $582.6 million, net of underwriting discounts and commissions and offering costs, bringing our total liquidity at January 31 to $895.2 million. We make use of a number of non-GAAP metrics to inform our management of the business and to give investors insight into our core business drivers. These include contribution margin and adjusted EBITDA. We define contribution margin as revenue less material costs. Historically, 85% to 90% of our direct cost for our program, excluding overhead allocations and D&A, have been material costs. So it is incredibly important for us to price our contracts at a healthy margin above our single largest cost, material cost. We target a 35% contribution margin on all new business. Contribution margin in 2025 was 32%, an increase of 2 percentage points from 2024's 30%. We don't disclose program level margins, but I will broadly say that margins on our newer programs have been quite a bit higher than our older programs. We attribute this improvement to our increased ability to project material costs based on years of experience with actual production runs, together with a more rigorous pricing process that includes the use of appropriate management reserves. To further reduce margin risk, just as we operate under firm fixed price contracts, we largely hold our suppliers to the same. We grew contribution margin dollars by $47 million in 2025 to $122 million, an increase of 63%. Loss per share was $0.89 for the year. Capital expenditures for 2025 were $8.9 million as compared to $18 million in 2024. As Dirk touched on in his remarks, our manufacturing process is highly flexible and very efficient, and this has enabled us to keep CapEx very low by the standards of the industry. Turning briefly to the quarter. Revenue for Q4 was $105 million, up 38% on Q4 2024. Gross profit margin was 20%, operating expenses were $38.2 million. Contribution margin was 33% and adjusted EBITDA was negative $1.4 million, up from the negative $4 million last year. Looking ahead, we expect revenue for the year to be in the range of $545 million to $595 million, up 48% year-over-year at the midpoint. Over 70% of this is expected to come from our existing backlog, with the remainder anticipated to come from new business in the back half of the year. With regards to new business, our current expectation is for government contracts to start to be awarded towards the middle of the year, and York intends to compete strongly for them. And now I'll hand it back over to the operator for questions. Operator?

[Operator Instructions] Your first question comes from the line of John Godyn of Citi.

Appreciate it. I wanted to -- there are a few things to follow up on, but I guess the one that I'll focus on is this acquisition, Orbion. Maybe you could just talk a little bit more about that, how it came about, what the terms were. And I was curious if this was the deal that was contemplated in the S-1. There was a note in the S-1 about a letter of intent for an acquisition. Was this that? Or was it a different one?

Yes, sure. Happy to dive into that one a little bit. Thanks, John. I appreciate the question. Yes, it is the acquisition that we are contemplating from the S-1. We're really excited about Orbion for a few different reasons. We've launched a good amount of satellites at this point. We've worked with a wide range of propulsion providers. Orbion was really a clear winner as far as their ability to execute, their ability to perform. Their hardware has performed really well in orbit. It's a really great team to work with. So we're excited about bringing that on. And it kind of goes to the vision of when we were doing the IPO, right? We spoke about the 4 different things that we were going to do and how we're going to go on offense. And one of those was some inorganic associated with bringing great technologies kind of in-house so we could align our technology road map, kind of give them a better vision of where the market was headed, where we were headed. So that they could be more successful in developing those products kind of right out the gate. And that kind of communication is going to be critical because we're already a leader as far as costs and schedule go. But with Orbion with us now, we'll be able to align that technology road map, give them assurance of the kind of size of production cadence they're going to need in the coming years. So that they'll be really prepared to deliver for us. And so they've been a phenomenal performer for us for years now. And so we think this will make them an even better performer for us and the rest of the market as well. So they will continue to execute as a wholly-owned subsidiary.

That's fantastic. And do you guys -- are you willing to give us a sense of how much revenue that's contributing to this year? And then just on M&A in general, are there any other acquisitions contemplated that we should be aware of?

Yes. Kevin, correct me if I'm wrong. I mean I don't think that we're breaking out them individually, right? I think it's -- we're going to still report at the top level, right?

We're not issuing specific guidance, John, on Orbion, but we can confirm that it's included in our consolidated guidance figure.

And to the latter question about additional M&A, I mean, I do think there's some opportunity for some additional M&A. I think people in the industry and in this segment kind of see what we're doing. They're very excited about it. They want to be a part of it. And so there'll be some other things where like Orbion, they make sense, right? They're the best technologies. It will help us continue to drive down cost even further and make that advantage that we have larger, but then also kind of align that so that our schedules continue to be the best in the sector. So I think there could be some more opportunity for that. And then there's also opportunities where we might start to look at kind of adjacent markets and things like that.

Your next question comes from the line of Seth Seifman of JPMorgan.

I wanted to start off talking about some of the opportunities for new business that you mentioned coming later in the year. Is it some of the Golden Dome opportunities moving maybe to the left of initial expectations for 2027? Is it in the intelligence community? Is it the next tracking layer? And what are the prospects to exit this year with a backlog that's bigger than where it is now?

Well, yes, I mean, I think that we feel pretty great about that, Seth. So I appreciate the question. I thought the pretty exciting part of the call was where we mentioned that we just won a new constellation for M-CLASS for a commercial customer. A 20-plus constellation. It's the first constellation of many planned for this customer. So I thought that was an exciting part. I thought that, that would add to the backlog. But -- so obviously, that's pretty exciting for us as well. As General Guetlein has kind of attested to and been more public in general with regard to Golden Dome and National Defense just in general. I mean, it's got -- everyone focuses on the name Golden Dome, but the reality is it's National Defense, right? So independent of what it's called. He's spoken a lot more about the absolute need to lower the cost, to move faster and then to leverage existing acquisition vehicles. We checked the box on all 3 of those. And so I think that's why we're starting to see a little bit more come out about National Defense and Golden Dome, what that's going to be. I can't go into any more details right now other than to say that it's a late-breaking news that we have not won 1, but we've won 2 IDIQ contracts now for different classified customers. So on this call alone, we have not only our healthy backlog and our ability to convert that backlog into revenue, which Kevin reported on, we've won a new commercial contract for the first of many constellations for our M-CLASS. And then we have now won 2 IDIQs for different classified customers. So we feel very bullish about the position that we're in. I think generally, though, I mean, just as a commentary, you're not going to hear a ton about Golden Done. General Guetlein has been pretty clear that most of the work is going to be classified, and that's kind of what we're seeing, right? We're seeing contracts being awarded on the classified side of things. So I'd be happy to talk more about those contracts that we've won for the different classified customers, but that will be kind of coming in the next few weeks as we kind of sketch those out in a little bit more detail on what we're allowed to discuss and what we're not. So we're still working on that. But hopefully, that gives you more insight. I mean I think that we're in a pretty bullish position with our performance and our ability to just between IPO and now, we've already added quite a bit more to the backlog. So I think we feel like we're in a good position, and we're going to execute like we always do.

Excellent. Excellent. Maybe to follow up then on the commercial win there. I guess the pieces of the TAM that you guys have laid out in the past were pretty national security oriented. So how do we think about that commercial piece coming into it and how -- maybe the size of that relative to the other pieces of the TAM and how significant that could get within your mix?

Yes. I mean I feel focus historically has been on National Defense, but that's mostly because the reality is that's where the dollars were. That's where the contracts were. So we won the contracts that were available to us and we did a very good job on them and executing on them as well. And so that success led to more contracts. So we're happy with that. But I'm very -- I'm more and more bullish every day on what commercial can do. Unfortunately, we can't disclose who that customer is right now, but I'm very excited about the mission and what they're doing. It's very much aligned with the trends that we're seeing today. And also what I think we're going to see is a lot more growth in this area. Really, traditionally, commercial has kind of struggled with kind of getting that kind of total gravity, I guess, for lack of a better term, on really garnering the attention it needs and the dollars it needs to really be at scale. But we're really seeing that shift. We're also seeing this administration say that they want to leverage more commercial, which obviously encourages investment in it as well. So I'm in hopes this is the first of many. I mean, I know for this customer alone, this is the first of many in the constellations that they're going to deliver to orbit. So we're obviously very happy to be in the position with that. But I think in general, commercial, we're just going to see more and more. The nice part is you kind of have a giant surge in national defense, right, which is a great market for us. And we're now showing some pretty significant diversity in customer base on that front. And then to have some big commercial wins is really great, too. So I think both markets are going to surge. Obviously, I think that we're in a good position to win that work. We just got to continue to execute as we have been, deliver at scale. And I think both of those markets are going to see healthy growth for many years to come. No one is saying we need less satellites in the future.

Your next question comes from the line of Peter Arment of Baird.

Dirk, just maybe just to circle back a little bit on your comments about kind of Golden Dome/the National Defense contracts. Has there -- we're dealing with a lot of investors are kind of very focused on if there's been a material change in what you view the PWSA kind of architecture is. I was wondering if you could just maybe shed light. Do you view it to be materially changing? Or is it just morphing into the various classified versions of Golden Dome? Just any insight would be helpful.

I think it's along the lines of what you said in the latter part there. So look, if it's called PWSA, if it's called Space Data Network, if it's called pLEO, whatever the name is, the government is definitively moving towards it. And they're delivering contracts pretty quickly now out to performers who are going to execute on this. They need this executed really quickly. So I don't think it's about, hey, does PWSA, is that going away? Is MILNET going away? There's nothing going away. Communications is not only absolutely critical for Golden Dome and missile and National Defense in general, it's the most important thing. Nothing else happens without communication. So I think it's more of there's definitely a realization that this is going to be the architecture of the future for the United States. And if it is going to be the architecture for the United States that it needs to be more coordinated, right? That's a general theme that we're hearing across anything, whether that's space, whether that's sea, land, air, it has to be more coordinated. So I think a lot of the "shifts" I guess, that you're seeing in PWSA Transport or MILNET or what have you, isn't really about do we need this? It is about we do need this, how are we going to get them to talk to one another. And maybe we should look at that in more detail and definitize that more before we continue on kind of separate disparate paths, which is kind of what got us into the challenges in the United States faces today is we have lots of amazing capabilities, but they're disparate and they don't talk to one another. So I think it's really more about that is whatever the name is, it doesn't matter, it's needed. I think it's just more about let's make sure that they're going to talk to one another because we shot ourselves in the foot like a couple of times over this. So let's not do that anymore. I think it's really more about that, like that's the mentality.

Got it. That's helpful color. And just it is exciting, obviously, with the new commercial win that you announced in February. Could you maybe talk a little bit about expectations of delivery of those 20-plus satellites just over what time line?

Yes. So T1 is an operational system. And as such, the readiness of the system is controlled information. So I can't discuss actual launch date, but we are very far along on production, and I think shipping is imminent. I probably can't get any more specific than that.

Your next question comes from the line of David Strauss of Wells Fargo.

Dirk, I wanted to ask about in the fiscal '26 DoD budget that was passed, I think, end of January or early February, there was still a whole bunch of Tranche 1 and Tranche 2 funding in there. So have you actually received all of the Tranche 1 and Tranche 2 funding? Is that reflected in backlog today for you? Or is there still a fair amount of funding that has to come through and be put into your backlog related to Tranche 1 and Tranche 2?

I believe it's all included in the backlog. But Kevin, maybe if you think I'm mistaken, you can speak up.

No, that's right, Dirk. What we report as backlog are only exercised options and only funded exercised options. So it's all -- our backlog is entirely funded.

Okay. So even though that wasn't -- the funding wasn't passed until January after the end of your 2025 year, that's in the backlog or it isn't in the backlog?

So let me try it this way. So all of the programs that we're on, right, have funds appropriated for them. And then just the way just to get into some of the nuances of how the government funding works is, yes, as we move into different fiscal years, they will then technically fund it, right? So the funding does come over time. I think the bigger point is that all these programs, the money is budgeted and set aside for it. But yes, there is a technical sort of nuance of how the -- over time, the actual money moves technically to that program. So within our backlog, again, it's all exercised contracts or exercised options within those contracts. We don't include unexercised options. A lot of those are the right of launch O&S portion. So that's not included in the backlog. And then to your point, things over time when the funding actually moves it, we don't move our backlog up and down by the funding amount just because it's a very small portion that's not funded, and we know that the funds are there. It's just more of a technicality of when they occur.

Okay. And then can you talk about kind of your current build rate? What are you producing at today? And what kind of build rate underlies the 2026 revenue guide as compared to 2025?

Yes. I mean -- so I would say that build rate is definitely not going to be -- is not the challenge for us. We're not building up our production in hopes of meeting the demand that we have or meeting future demand. Quite the opposite. So York has invested pretty heavily in our production capacity. In our Willow facility alone, we have all the capacity to meet all the production needs through 2028, right? So that's Willow alone. It does not include production capacity at our Wazee facility, which is a little bit smaller, but nonetheless, a completely different production facility. And most importantly, our Potomac facility, which is actually 4x larger than our Willow facility. So we've actually built out, invested in and are prepared for massive production numbers on the order of up to 1,000 satellites a year. So that's what we've invested in, and that's what our capacity is today. And that's a little bit of a differentiator between a lot of other companies who are still trying to prove their first product. And even after they prove their first product, try to get to scale. And so that's a little bit different for us. So everything at just our Willow facility alone meets all our projections through '28, and we have 4x more capacity in our Potomac facility. So we're very well positioned for the growth that we expect going on through '26, '28, '29.

Yes. I'll just maybe add a few things here, Dirk. There's a pretty helpful slide we have in our earnings deck. I think you should all have access to that either now or after the call. But it's Slide 8, and it shows that right now, we have 33 satellites on orbit. But then we provide some general guidance to the satellites that we have currently in our backlog being produced. It's 107, and we expect all 107 of those to be launching over the course of '26 and '27. As Dirk mentioned earlier, we can't provide specific launch timing for specific programs. That's controlled information. But what we can say is, broadly speaking, we'll have a total of 140 satellites on orbit by the end of 2027, if not sooner. And so the way to think about how that ties to our -- you touched on our revenue. Again, over 70% at the midpoint of our guidance is backlog. And that's really just pretty highly predictable revenue stream. It's driven off our cost incurrence. And we have a pretty mature at this point, supply chain. And we have daily and weekly discussions depending on the vendor and the program. But it's all to say we have a pretty good line of sight into the tempo of that revenue. And it's all generally tied to the higher theme that over the course of the next 2 years, we're going to be putting 107 satellites into orbit. And that actually does not include -- that 107 number I'm citing does not include to be clear, that new commercial constellation. We're still working with that customer to fine-tune some of the expectations for launch dates there.

[Operator Instructions] Your next question comes from the line of Austin Moeller of Canaccord Genuity.

Just my first question here. Given the funding already included in Big Beautiful Bill and the fiscal year '26 budget for Golden Dome, what funding do you think might be allocated in this $450 billion reconciliation bill for space that they're talking about? Do you think it might include more satellites or more ground infrastructure for Space Force and DoW?

I mean at the 10,000-foot level, it's going to include more for both, for sure. Space is absolutely going to be critical to the National Defense and what we're doing in the future. But that does include a significant amount of ground effort as well. Ground will need to tie, like I said, all the disparate systems together. That's kind of the main challenge that we have is we have all the capabilities we need. We need to be more efficient in how they talk to one another. So ground will be a huge part of that. building out ground is important. And that's one of the IDIQs that I mentioned was a contract win for us is about York helping to contribute to that, us helping to contribute on how you operate hundreds and thousands of satellites in orbit, how you feed that information and how you distribute that information and disseminate it. And satellites are really the best way of disseminating information. It's kind of above the entire battlefront. So there's going to be a significant amount for both ground and satellites, for both. Now all that said, our pipeline that we've identified and we have to update it, I'm sure, but we have $11 billion in identified pipeline right now. So that's seemingly only going to grow. I've seen more requests for more funding for some of our more recent engagements as well. So our identified pipeline is $11 billion, and that was before a lot of the growth that you're talking about here.

Okay. And as the production lots for Golden Dome or PWSA grows with additional contracts for that constellation or those constellations, what gives you confidence in maintaining the target gross and contribution margins going forward? Is it just the strong execution record and timely delivery and best-in-class product?

Yes. I mean it's -- for us, it's always the 3 main metrics is that best capability, best performance, best schedule, which we meet on all those fronts. But historically, we have executed at a price point that is half the price of our competitors. And we've done it with the margins that we are very close to now. And we think that we have opportunity to increase that because we're only becoming more and more efficient. So just as a kind of a side story, I guess, or an example is critical design review is one of the most critical reviews for any of our programs. I can say that for the T1 program at CDR, we had 65 engineering heads working that program. And at the same critical design review for T2, we had 15, right? So we are seeing significant improvements in our efficiency and our ability to execute. So Kevin, I mean, you might have some more comments on those margins there, but those are the margins that we plan to. Those are the margins that we price to. Those are the margins that we execute on. And we've been doing it at those margins at half the price. But Kevin, I don't know if there's more to add.

No, I think you covered it really well, Dirk. What I would say is that, yes, given that we are already half the price of our competition, we're starting from a pretty enviable pricing position, right? So I don't feel like we need to certainly lower price at all. I think our strategy, as Dirk has outlined in the past is probably maintain this pricing. We make nice margins at it. But what we can do and what we are doing, right, is as our supply chain matures and we're ordering more volumes, we're going to see just our supply base or our cost base start to come down, right? So definitely, I think, there's more upside to contribution margin. Just from a sort of an accounting perspective, some of these vertical integration plays that we've done, those are highly accretive to contribution margin. Just the way that the intercompany math works with their profit margin basically getting kind of canceled out. So it's all to say, I feel very good about contribution margin growing from here. And another aspect of that, frankly, is we've been producing at large scale for a couple of years now, which is something a lot of our competition probably still has ahead of them. And so we've learned just a lot by being in the trenches and fielding these large constellations. So we -- there's no more surprises of things that we perhaps forgot to price in when we bid a contract a couple of years ago. Just that's what you get from the level of experience and repetition that we've had. So we don't expect any surprises on the material cost side. And again, the trend will be to continue to drive down our supply chain costs.

Your next question comes from the line of Ryan Koontz of Needham & Co.

And I want to ask kind of big picture here with regards to the '26 guide and I see over 70% of that's already in backlog. But if you can expand on the kind of -- the types of revenue or the mix of revenue that's not currently in backlog that you'd expect to see in '26 for us.

You want me to start -- Ryan, what I'd say is that we are expecting new business award activity to start to pick up as some of these dollars get allocated in the eventual sort of spending agencies that will ultimately be awarding the contracts. We think that's going to take a little bit of time. We think once we kind of get to that midyear and into the second half, we're going to start to see some pretty robust award activity, and that's the basis of our range of $545 million to $595 million of rev. So we do think most of that will be from our traditional Department of Defense government sector, whether that's PWSA or Golden Dome or IC. One of the themes Dirk has touched on today is that wherever it comes out of, we're a bit agnostic to that because we just believe the capabilities we have are -- position us well across the board. There'll be a little bit of commercial, that new commercial contract. We're not anticipating substantial revenue recognition from that one this year. So I would say it's going to be largely second half government defense awards and a little bit of commercial.

Helpful. That's really great. And anything on the supply chain you'd call out as challenging these days. We hear about it in other areas of tech getting tough. But any particular areas you're concerned about having to invest maybe extra working capital to be prepared?

Yes. I mean we do hear a lot about supply chains now. But I think that we're a little bit differentiated in that sense. And how I mean that is we are at production capacity now, which means that we were tackling supply chain issues several years ago. And so I think it's a little bit new for folks trying to ramp up now, but we've done that investment. I think acquisitions like Orbion are very, very helpful in the sense of we can better plan with our partners on kind of what kind of numbers we're going to need and when, and we can co-invest if that's required. And so we've done a lot of that already. And so our supply chain is very robust, very secure. We worked these issues many years ago. We did things like buy solar arrays in bulk ahead of a need, ahead of challenges that were coming ahead. We co-invested on some laser capability to stand up production on that. But again, that was for a tZERO contract. So we've basically retired a lot of that investment we needed to make in our supply chain. We're kind of more now in improvement cycle where we're trying to improve it, make it more efficient and make it a little bit better. But us kind of delaying schedule and things like that because of supply chain is a problem that we looked at a couple of years ago, and we feel like we have a good handle on it. I think when we did the IPO, we did talk about that we were going to inventory a lot of our spacecraft. We're in a unique position to be able to do that. We have a very large backlog. We have a consistent product. We know that it works. We know that it works in orbit. And so we are going to invest in some inventory, which should help with the supply chain challenges as well. The reality is something being delayed is only really a problem if you're already behind, right? But if you are ahead of the need and ahead of a schedule and have an inventory product, if something shows up 3 weeks later than it should have, but you have inventory spacecraft and you have ahead of a need, then you're able to kind of sustain those impacts. So that's where we're focused more is standing up, basically supporting our supply chain to be more efficient, and then we're going to build inventory spacecraft. And that's going to really take that kind of lead time out of the equation for us.

Great. And one just quick clarification there. If you're building that inventory and shipping from inventory, is that a different form of rev rec than traditionally?

No. What it does is effectively accelerate the revenue recognition. So as Dirk said, we want to be smart about building up some satellite platforms in inventory. And then that way, our BD folks can be empowered to say, hey, how quickly do you need this mission flown because we've proven, I think, Dirk touched on in his prepared remarks with our Dragoon mission, right? We -- ATP to orbit was 7 months, which is pretty unheard of. So what that will do is we'll kind of build up the cost structure on the balance sheet and inventory. And then once we get that allocated to a particular revenue-generating program, it will be a very fast cycle of rev rec. So it will be pretty exciting to see that happen.

Your next question comes from the line of Sheila Kahyaoglu of Jefferies.

Congrats on your first quarter. Maybe if I could ask first on just the margin comments and the pricing. You guys offer an affordable solution. What's driving some of the higher margins? I know you talked about the supply chain improvements. What is that? Is that more like supply chain pricing? And how do we think about the volume leverage? And maybe if we could clarify on Orbion, how do we think about the revenue contribution there given that's a vertical integration play as well?

Kevin, why don't you talk to that? Yes.

I'll touch on that. Yes, we'll start with the Orbion one. So the way it works, broadly speaking, when we acquire a company like Orbion, and like ATLAS, it's the same thing for ATLAS. So they do York business and non-York business. So when our consolidated numbers are put out, the net impact is just on the non-York business. Because the way it works from an accounting perspective is that our -- their York business, that revenue gets canceled out and the associated COGS from us. So their revenue is our COGS, so to speak, those net out in the elimination. So again, they are baked into our projections. They're not a, I would say, not a substantial portion of our 2026 guidance because, again, we're buying companies that we already buy a lot of stuff from. And then so that kind of -- it's more of a margin improvement. I touched on earlier, the more -- when we do these type of vertical integration acquisitions, they're very accretive to contribution margin, right? Because we're basically stripping out what otherwise would have been profit margin that we were paying to a third-party vendor. Now that just kind of stays within the family, so to speak. So that's a big driver of increased contribution margin and gross -- overall gross margin. So that's how that works. And then just in general, I think you had a question about margin. So our margins improved year-over-year, our gross margin by about 700 basis points. And that's really a result of a couple of things. It's program mix. So our newer vintage program, so a lot of the growth in revenue in 2025 came from our Tranche 2 transport layer programs, alpha and gamma. Those were programs that we were -- we priced when we had a lot of reps in our system through T0 and T1. So we priced that really well, and those are higher margin. In general, our newer programs are higher margin. So it's a factor of mix -- and then we also had reduced negative EAC adjustments in fiscal '25. And again, that's another sort of proof point of a maturing business and maturing sort of pricing rigor and cost rigor. We don't expect to see any sort of meaningful negative EAC adjustments as we move forward. So it's really those 2 things that drove the nearly 700 basis point margin -- gross margin improvement in '25.

Got it. That's very clear. And then maybe if you could just provide a quick update on how you're thinking about Transporter Tranche 3 and just the path forward for that mission.

Yes. As I kind of talked about a little bit earlier, there's no doubt that communications is going to be a major part of Golden Dome and National Defense in general. I believe that it's going to be restructured under something called the Space Data Network, where they're working through that architecture and what that will look like now. My best guess, and it's a guess, is that I think transport will probably be part of that Space Data Network, and it will interlink with the other systems. So it kind of goes to what I was saying before of, they're realizing that these systems cannot be disparate and unique, and they need to be part of a larger architecture that works together. And my feeling is that I think transport will definitively be a part of that. I think that they're working the details of that architecture now and how that will work. Obviously, I think, that we're in a really phenomenal position to win significant parts of that given that we've already performed so well on tZERO, T1. We're already under contract for T2. So I think our delivered capabilities, flight heritage and the fact that we're the first time to launch every single time kind of speak to us being able to deliver that mission successfully. So I think it's going to be part of space data network. And I think that they're working that architecture now, and we feel like we're in a strong position to win that work.

I will now turn the call back to Dirk Wallinger for closing remarks.

Yes. So essentially, I just wanted to say thank you for everyone taking the time who've been -- those -- a lot of folks who have been following us for a little bit. I appreciate you learning more about what we're doing. Hopefully, you can see that we have really strong engagement, the ability to execute. We have a lot of missions in front of us, which we're excited to get into. We're seeing our base grow significantly from not only the kind of proliferated LEO national defense systems we've historically worked on. We're seeing new contracts with multiple classified customers. We're seeing large constellations being secured for commercial customers as well. So we're really excited about the future. We hope that you'll keep following along with us, and I appreciate everyone for taking the time. So thank you so much yes.

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