Financial Data and Key Metrics Changes - The company reported a revenue of $21.8 million for Q1 2026, representing a 36.5% increase from the previous year, driven by growth in the commercial aftermarket business and higher service revenues [9][10] - Adjusted EBITDA grew 141% to $7.4 million, up from $3.1 million in the same period last year, largely due to revenue growth and a more favorable revenue mix [4][14] - Net income for the quarter was $4.1 million, compared to $700,000 last year, with GAAP earnings per diluted share increasing to $0.22 from $0.04 [13] Business Line Data and Key Metrics Changes - Product sales reached $13.6 million, up from $10 million last year, primarily due to stronger volumes of aftermarket product upgrades [10] - Service revenue increased to $8.2 million from $6 million, driven by growth in service volumes related to IRUs and radio products [11] - Gross profit rose to $11.9 million, an increase of 80%, with gross margin improving to 54.5% from 41.4% [11][12] Market Data and Key Metrics Changes - The company faced a decline in F-16 revenues by approximately $1.2 million due to a manufacturing transition, but expects a ramp-up in revenues as the year progresses [10][24] - Temporary headwinds were noted in the business jet markets, leading to a revenue decline of approximately $1 million during the quarter [10] Company Strategy and Development Direction - The company is focused on its IA Next long-term value creation strategy, which prioritizes profitable growth, operational excellence, and disciplined capital allocation [4][5] - The long-term target includes achieving $250 million in revenue with Adjusted EBITDA margins between 25%-30% through organic and inorganic growth [5] - The company is pursuing complementary acquisitions to expand capabilities and increase recurring revenue streams [7][8] Management's Comments on Operating Environment and Future Outlook - Management expects organic revenue to be essentially flat year-over-year due to the pull forward of revenue related to F-16 production and service revenue [17] - The outlook for the remainder of fiscal 2026 remains positive, with expected second-quarter revenues in the range of $20 million to $22 million [17] Other Important Information - Cash flow from operations was $8.2 million, up from $1.8 million in the previous year, with free cash flow increasing to $7 million from $1.6 million [15] - The company had total debt of $23.8 million and cash and cash equivalents of $8.3 million, resulting in a net debt of $15.5 million [16] Q&A Session Summary Question: What products drove the increase in commercial aftermarket demand? - The increase was mainly driven by sales of new products developed for air transport, including the ICAT system for the 757 and 767 [19] Question: Was there any pull forward in demand? - The strong first quarter was attributed to significant growth in the previous year, with organic growth expected to be in the single digits for 2026 [20][22] Question: What growth opportunities exist for the F-16 platform? - Growth opportunities include new contracts and RFPs from Lockheed and the U.S. government for subassemblies and full units [24][25] Question: What surprised the company to the upside in the last quarter? - The upside was due to the timing of shipments, with some purchase orders arriving sooner than expected [31] Question: What is the outlook for defense programs outside of the F-16? - There are numerous RFPs for upgrades to various platforms, indicating a strong opportunity for growth in defense spending [32] Question: Is there any acceleration in the M&A pipeline? - The company expects to see opportunities in the near term, although some previous opportunities were not aligned with strategic objectives [33] Question: How is the integration of F-16 components progressing? - The integration took longer than planned due to requirements from Lockheed Martin and the U.S. government [39] Question: What is the market interest in UMS and the regulatory environment for automation? - There is significant interest in cockpit automation, with potential regulatory changes expected to allow for one-pilot operations in the future [41][42]