Arxis, Inc.
For the period ended Jun 30, 2026. Filed Jul 30, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 30, 2026
ARXS$49.90+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-28.
0001193125-26-243043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001193125-26-325027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 112 current paragraphs.
54 unchanged; 35 reworded; 20 added; 9 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
On June 1, 2026, the Company acquired 100% equity interest in MagCanica, LLC (“MagCanica”), a designer and manufacturer of non-contact, high-precision torque sensors that are used in high-performance rotating systems. The acquisition complements the Company's existing military flexible driveshaft capabilities and addresses a growing need for real-time monitoring of mission-critical rotating systems.
Current report
Three and Six Months Ended June 30, 2026 as compared to the Three and Six Months Ended June 30, 2025
Current report
Revenue increased by $100.3 million, or 25.0%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Current report
Revenue increased by $179.1 million, or 22.9%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Current report
For the six months ended June 30, 2026 as compared to the 2025 period, organic revenue increased by $149.0 million, or 19.1%, including a 1% favorable foreign currency impact. Growth remained broad-based across all of our end markets throughout the first half of 2026.
Current report
For the three months ended June 30, 2026 as compared to the 2025 period, gross profit increased by $65.0 million, or 32.9%, which was primarily due to improved operating leverage on higher volumes, and partially attributable to favorable price realization, reflecting continued operational execution across the business, and incremental gross profit from the acquisitions of Oldham, Micro-Tronics, and MagCanica.
Current report
For both the three and six months ended June 30, 2026 as compared to the 2025 period, gross margin increased primarily due to operational leverage on increased volumes and partially attributable to favorable price realization. Continued operational execution initiatives also supported margin expansion.
Current report
Selling, general and administrative expenses increased by $113.1 million, or 140.3%, for the three months ended June 30, 2026 as compared to the 2025 period. Selling, general and administrative expenses increased by $132.7 million, or 89.0%, for the six months ended June 30, 2026 as compared to the 2025 period. These increases were primarily driven by share-based compensation expense and transaction expenses recognized in connection with our IPO.
Current report
Interest expense, net decreased by $17.9 million, or 31.3%, for the three months ended June 30, 2026 as compared to the 2025 period, which was primarily dueto the repayment of $946.0 million aggregate principal amount of debt in April 2026 using a portion of the proceeds from the IPO, partially offset by an $11.4 million loss on extinguishment of debt.
Current report
Interest expense, net decreased by $42.2 million, or 33.6%, for the six months ended June 30, 2026 as compared to the 2025 period, which was primarily dueto the repayment of $946.0 million aggregate principal amount of debt in April 2026 using a portion of the proceeds from the IPO.
Current report
Income Tax Expense
Current report
Income tax expense decreased by $54.8 million for the three months ended June 30, 2026 as compared to the 2025 period. The Company's effective income tax rate was (247.2)% for the three months ended June 30, 2026, compared to 200.6% for the three months ended June 30, 2025. The change in the effective tax rate was primarily due to IPO-related items, including share-based compensation expense, which resulted in a near break-even pre-tax book loss.
Current report
Electronic Components Segment Adjusted EBITDA increased by $20.2 million for the three months ended June 30, 2026 as compared to the 2025 period. Electronic Components Segment Adjusted EBITDA increased by $36.6 million for the six months ended June 30,
Current report
2026 as compared to the 2025 period. These increases were primarily driven by increased operating leverage resulting from higher sales volumes, together with continued operational efficiencies.
Current report
Mechanical Components segment revenue increased by $63.6 million or 28.6% for the three months ended June 30, 2026 as compared to the 2025 period. Mechanical Components segment revenue increased by $110.9 million or 25.6% for the six months ended June 30, 2026 as compared to the 2025 period. These increases were primarily due to higher revenue across all of our end markets driven by strong customer demand, and partially attributable to the acquisitions of Oldham and Micro-Tronics.
Current report
Adjusted EBITDA and Adjusted EBITDA Margin exclude certain items included within other income and expenses that are not reflective of our ongoing operational results;
Current report
Represents other income and expense adjustments that are non-recurring, non-operational, or not reflective of core performance, such as loss on disposal of assets, commercial commitments or legal settlements, income from transition services agreements and non-operational pension impacts. Includes $13.3 million of expense related to the Convertible-Related Tax Receivable Agreement for the three and six months ended June 30, 2026.
Current report
In connection with the Reorganization and the issuance of convertible common stock, the Company entered into the Convertible-Related Tax Receivable Agreement ("TRA"), pursuant to which the Company is contractually obligated to pay 85% of the cash tax savings, if any, realized from compensation deductions related to the convertible common stock award and the related Section 83(b) election. As of June 30, 2026, the Company had accrued $13.3 million related to its obligations under the TRA within Other long-term liabilities.
Current report
Convertible-Related Tax Receivable Agreement
Current report
The Company accounts for its obligations under the TRA as a contingent liability under ASC 450, which requires management to exercise significant judgment in assessing whether a payment obligation is probable and reasonably estimable, in estimating the amount of any such obligation. These judgments include estimates of the Company's future taxable income, the impact of the compensation deduction on tax attribute utilization, the applicable U.S. federal income tax rate and an assumed weighted-average state and local income tax rate. These estimates are inherently uncertain and depend on factors outside the Company's control, including future operating results and changes in tax law. Because the amount and timing of future payments depend on facts that will not be known until future periods, actual amounts paid under the TRA may differ from amounts currently accrued, and any changes in estimate could have an effect on the Company's results of operations in the period identified. See "Note 14. Equity" to the condensed consolidated financial statements herein for further information.
Removed paragraphs (9)
Previous report
For the three months ended March 31, 2026, we generated revenue of $458.9 million, representing an increase of 20.7% compared to $380.1 million for the three months ended March 31, 2025. Net income for the quarter was $53.3 million compared to net loss of $4.3 million for the three months ended March 31, 2025. Adjusted EBITDA 1 was $175.2 million, or 38.2% of revenue, compared to $134.1 million, or 35.3% of revenue, for the three months ended March 31, 2025.
Previous report
Not meaningful (“NM”)
Previous report
Revenue increased by $78.8 million, or 20.7%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Previous report
Gross margin was 51.2% during the three months ended March 31, 2026 compared to 42.9% for the three months ended March 31, 2025. The increase was primarily driven by favorable price realization and operational leverage on increased volumes. Continued operational execution initiatives also supported margin expansion. Gross margin for the three months ended March 31, 2025 was negatively impacted by 4.8% of amortization of inventory step-up resulting from prior acquisitions.
Previous report
Selling, general and administrative expenses increased by $19.7 million, or 28.7%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This increase was primarily driven by additional corporate costs incurred in connection with preparing to operate as a public company, as well as transaction expenses incurred related to our initial public offering.
Previous report
Interest expense, net decreased by $24.3 million, or 35.6%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This decrease was primarily due to the debt refinancing in February 2025, which resulted in a lower effective interest rate in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 and the absence of the $15.5 million loss on debt extinguishment which was recognized in the three months ended March 31, 2025.
Previous report
Income Tax Expense (Benefit)
Previous report
Electronic Components Segment Adjusted EBITDA increased by $16.4 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This increase was primarily due to robust growth in defense and space and industrial technology end markets and execution of our operational strategy.
Previous report
Mechanical Components segment revenue increased by $47.3 million or 22.5% for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to higher revenue across all of our end markets, led by growth in the defense and space and commercial aerospace end markets, reflecting sustained customer demand and higher production activity.
Reworded paragraphs (35)
Previous wording
The following is a discussion of the historical results of operations and liquidity and capital resources of the Arxis Businesses. The Arxis Businesses were not historically consolidated. This should be read in conjunction with our unaudited condensed combined financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited combined financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our final prospectus filed with the SEC pursuant to Rule 424(b) (the “Prospectus”) on April 16, 2026, for the year ended December 31, 2025. This discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Statements” sections. Unless the context otherwise requires, references in this section to “we,” “our,” “us” and the “Company” refer to the Arxis Businesses.
Current wording
The following is a discussion of the historical results of operations and liquidity and capital resources of Arxis, Inc. The Arxis Businesses were not historically consolidated. This should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited combined financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our final prospectus filed with the SEC pursuant to Rule 424(b) (the “Prospectus”) on April 16, 2026, for the year ended December 31, 2025. This discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Statements” sections. Unless the context otherwise requires, references in this section to “we,” “our,” “us” and the “Company” refer to Arxis, Inc. Certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in thousands.
Previous wording
1 Refer to “Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable GAAP financial measure.
Current wording
We generated revenue of $500.7 million for the three months ended June 30, 2026, representing an increase of 25.0% compared to $400.4 million for the 2025 period. Net loss for the for the three months ended June 30, 2026 was $4.9 million compared to $29.3 million for the 2025 period. Adjusted EBITDA was $211.5 million, or 42.2% of revenue, for the three months ended June 30, 2026, compared to $153.7 million, or 38.4% of revenue, for the 2025 period. Refer to“Non-GAAP Financial Measures” in this discussion and analysis for additional information and limitations regarding these non-GAAP financial measures, including a reconciliation to the comparable GAAP financial measure.
Previous wording
Demand across our end markets remained strong during the first quarter of 2026, driven by continued growth in defense and space programs from increasing U.S. and allied budgets, sustained growth in commercial aerospace from robust production rates and aftermarket activity, and solid demand across our industrial technology end markets driven by continued investment in automation and electrification. Our results are supported by disciplined execution, productivity initiatives, and cost management, underscoring the strength and scalability of our proprietary business system – Arxis EDGE (Empower Data-Driven Growth and Execution) – through which we drive team-based selling and accountability, increase cross-selling opportunities across our business units and support our commercial strategy. Additionally, we continue to pursue strategic acquisitions that complement our existing portfolio.
Current wording
Demand across our end markets remained strong during the second quarter of 2026, driven by continued growth in defense and space programs from increasing U.S. and allied budgets, sustained growth in commercial aerospace from robust production rates and aftermarket activity, and solid demand across our industrial technology end markets driven by continued investment in automation and electrification. Our results are supported by disciplined execution, productivity initiatives, and cost management, underscoring the strength and scalability of our proprietary business system – Arxis EDGE (Empower Data-Driven Growth and Execution) – through which we drive team-based selling and accountability, increase cross-selling opportunities across our business units and support our commercial strategy. Additionally, we continue to pursue strategic acquisitions that complement our existing portfolio.
Previous wording
The following significant events occurred during or subsequent to the three months ended March 31, 2026:
Current wording
The following significant events occurred during or subsequent to the six months ended June 30, 2026.
Previous wording
In April 2026, the Company completed its Reorganization and IPO of shares of Class A common stock. The Company’s Class A common stock began trading on the Nasdaq under the ticker symbol “ARXS” on April 16, 2026. Net proceeds from the IPO were approximately $1,221 million, after deducting underwriting discounts, commissions and offering costs. A portion of the net proceeds was used to repay approximately $946 million of outstanding indebtedness under the Company’s Term Loan Credit Facility, with the remainder to be used for working capital and general corporate purposes.
Current wording
In April 2026, the Company completed its Reorganization and IPO of shares of Class A common stock. The Company’s Class A common stock began trading on the Nasdaq under the ticker symbol “ARXS” on April 16, 2026. Net proceeds from the IPO were $1,220.6 million, after deducting underwriting discounts, commissions and offering costs. A portion of the net proceeds was used to repay $946.0 million of outstanding indebtedness under the Company’s Term Loan Credit Facility, with the remainder to be used for working capital and general corporate purposes.
Previous wording
In connection with the IPO, the Company completed the Reorganization, pursuant to which the Arxis Businesses were reorganized into a corporate structure. Prior to the Reorganization, the Arxis Businesses operated as limited partnerships and limited liability companies. As a result of the Reorganization, the Company will be subject to U.S. federal and state corporate income taxes on a consolidated basis. Refer to the Company’s Prospectus filed with the SEC on April 16, 2026 for additional details regarding the Reorganization.
Current wording
In connection with the IPO, the Company completed the Reorganization, pursuant to which the Arxis Businesses were reorganized into a corporate structure. Prior to the Reorganization, the Arxis Businesses operated as limited partnerships and limited liability companies. As a result of the Reorganization, the Company is subject to U.S. federal and state corporate income taxes on a consolidated basis. Refer to the Company’s Prospectus filed with the SEC on April 16, 2026 for additional details regarding the Reorganization.
Previous wording
On January 5, 2026, the Company acquired 100% of the equity interest of Micro-Tronics, Inc. (“Micro-Tronics”), aleading provider of engineered, mission-critical elastomeric and metallic components for commercial aerospace and defense applications. The acquisition expands the Company's product line into adjacent and overlapping capabilities, including elastomeric diaphragm seals and assemblies to high-precision electrical discharge machined components.
Current wording
On January 5, 2026, the Company acquired 100% of the equity interest of Micro-Tronics, LLC (“Micro-Tronics”), aleading provider of engineered, mission-critical elastomeric and metallic components for commercial aerospace and defense applications. The acquisition expands the Company's product line into adjacent and overlapping capabilities, including elastomeric diaphragm seals and assemblies to high-precision electrical discharge machined components.
Previous wording
For additional information regarding our acquisitions, refer to "Note 3. Business Combinations,” to the unaudited condensed combined financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
For additional information regarding our acquisitions, refer to "Note 3. Business Combinations,” in the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The following tables set forth a summary of our results of operations for the three months ended March 31, 2026 and 2025.
Current wording
The following tables set forth a summary of our results of operations for the three and six months ended June 30, 2026 and 2025.
Previous wording
Organic revenue increased by $65.1 million, or 17.1%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, including a 1% favorable foreign currency impact. The increase was driven by broad-based growth across all of our end markets, led by defense and space, and supported by continued strength in commercial aerospace and industrial technology.
Current wording
For the three months ended June 30, 2026 as compared to the 2025 period, organic revenue increased by $83.9 million, or 21.0%, which was driven by broad-based growth across all of our end markets, led by Industrial Technology, and supported by continued strength in Commercial Aerospace and Defense and Space.
Previous wording
Growth across all end markets reflected the combined benefit of higher sales volume and favorable pricing actions. Volume growth reflected increased customer demand across key programs and applications, as well as contributions from new business wins, contributing mid-teens growth in defense and space, high-single-digit growth in commercial aerospace, and low-teens growth in industrial technology. Pricing contributed a mid-single-digit percentage increase across each of our end markets, reflecting contractual price escalations and price realization actions.
Current wording
For the three months ended June 30, 2026 as compared to the 2025 period, growth across all of our end markets reflected the combined benefit of higher sales volume and favorable pricing actions. Volume growth reflected increased customer demand across key programs and applications, as well as contributions from new business wins, contributing mid-teens growth led by Industrial Technology and Commercial Aerospace end markets. Pricing contributed a mid-single-digit increase across each of our end markets, reflecting contractual price escalations and price realization actions.
Previous wording
Demand across our end markets was strong, driven by increased defense and space program activity supported by higher U.S. and allied defense spending, robust commercial aerospace production rates and aftermarket activity, and ongoing investment in automation and electrification across industrial technology applications.
Current wording
The favorable demand environment remained consistent throughout the first half of 2026, supported by increased U.S. and allied defense spending, higher commercial aerospace production rates and aftermarket activity, and continued investment in automation and electrification across industrial technology applications.
Previous wording
Acquisition revenue of $13.7 million for the three months ended March 31, 2026 represents revenue from businesses acquired after March 31, 2025 that was not included in the comparable organic revenue base for the period, and is attributable to the acquisitions of Oldham and Micro-Tronics.
Current wording
For the three and six months ended June 30, 2026 acquisition revenue was $16.4 million and $30.1 million, respectively, which represents revenue from businesses acquired after June 30, 2025 that was not included in the comparable organic revenue base for the period, and is attributable to the acquisitions of Oldham, Micro-Tronics, and MagCanica.
Previous wording
Gross profit increased by $71.9 million, or 44.2%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to improved operating leverage on higher volumes and favorable price realization, reflecting continued execution of operational execution across the business. The increase was also partially due to gross profit of $6.4 million that was recognized in the three months ended March 31, 2026 attributable to the acquisitions of Oldham and Micro-Tronics. Gross profit for the three months ended March 31, 2025 was negatively impacted by $18.2 million of amortization of inventory step-up resulting from prior acquisitions.
Current wording
For the six months ended June 30, 2026 as compared to the 2025 period, gross profit increased by $136.9 million, or 38.0%, which was primarily due to improved operating leverage on higher volumes, and partially attributable to favorable price realization, reflecting continued operational execution across the business. The increase was also partially attributable to a $16.8 million favorable change in amortization of inventory step-up from acquisitions, and incremental gross profit from the acquisitions of Oldham, Micro-Tronics, and MagCanica.
Previous wording
Amortization of intangible assets increased by $1.9 million, or 5.7%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This increase was primarily due to amortization related to acquired intangible assets.
Current wording
Amortization of intangible assets increased by $2.1 million, or 6.1%, for the three months ended June 30, 2026 as compared to the 2025 period. Amortization of intangible assets increased by $4.0 million, or 5.9%, for the six months ended June 30, 2026 as compared to the 2025 period. These increases were due to amortization related to acquired intangible assets.
Previous wording
Other income, net increased by $1.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase is primarily due to interest income.
Current wording
Other income, net increased by $1.7 million for the three months ended June 30, 2026 as compared to the 2025 period. Other income, net increased by $3.0 million for the six months ended June 30, 2026 as compared to the 2025 period. These increases were primarily due to interest income.
Previous wording
Income tax expense increased by $18.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The Company's effective income tax rate was 22.8% for the three months ended March 31, 2026, compared to 36.7% for the three months ended March 31, 2025. The change in the effective tax rate was primarily driven by significantly higher pre-tax book income and changes in the mix of earnings and losses across jurisdictions in 2026.
Current wording
Income tax expense decreased by $36.6 million for the six months ended June 30, 2026 as compared to the 2025 period. The Company's effective income tax rate was 28.4% for the six months ended June 30, 2026, compared to 250.9% for the six months ended June 30, 2025. The change in the effective tax rate was primarily due to higher pre-tax book income across the Company’s business entities, as well as changes in the jurisdictional mix of earnings and losses in 2026.
Previous wording
The following table presents revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin for the three months ended March 31, 2026 and 2025:
Current wording
The following table presents revenue by segment, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin for the three and six months ended June 30, 2026 and 2025.
Previous wording
Electronic Components segment revenue increased by $31.4 million, or 18.5%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to higher revenue across our defense and space and industrial technology end markets driven by strong customer demand.
Current wording
Electronic Components segment revenue increased by $36.7 million, or 20.6%, for the three months ended June 30, 2026 as compared to the 2025 period. Electronic Components segment revenue increased by $68.2 million, or 19.6%, for the six months ended June 30, 2026 as compared to the 2025 period. These increases were primarily due to higher revenue across our Industrial Technology and Defense and Space end markets driven by strong customer demand.
Previous wording
Mechanical Components Segment Adjusted EBITDA increased by $32.5 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This increase was primarily due to robust organic sales growth in our defense and space and commercial aerospace end markets, and execution of our operational strategy, including continued operational efficiencies and cost optimization initiatives. The increase was also partially attributable to the acquisitions of Oldham and Micro-Tronics.
Current wording
Mechanical Components Segment Adjusted EBITDA increased by $42.3 million for the three months ended June 30, 2026 as compared to the 2025 period. Mechanical Components Segment Adjusted EBITDA increased by $74.7 million for the six months ended June 30, 2026 as compared to the 2025 period. These increases were primarily driven by higher sales volumes, which increased operating leverage, together with continued execution of our operational strategy, including operational efficiencies and cost optimization initiatives. These increases were also partially attributable to the acquisitions of Oldham and Micro-Tronics.
Previous wording
For more information regarding our segments please refer to “Note 5. Segment Information” to the unaudited condensed combined financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
For more information regarding our segments please refer to “Note 5. Segment Information” in the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Adjusted EBITDA is defined as Net income (loss), adjusted for: (i) interest expense, net; (ii) income tax expense (benefit); (iii) depreciation and amortization; (iv) acquisition and integration costs; (v) restructuring costs; (vi) transaction and other deal related expenses; and (vii) share-based compensation expense. Management defines Adjusted EBITDA Margin as Adjusted EBITDA divided by Revenue.
Current wording
Adjusted EBITDA is defined as Net income (loss), adjusted for: (i) interest expense, net; (ii) income tax expense (benefit); (iii) depreciation and amortization; (iv) acquisition and integration costs; (v) restructuring costs; (vi) transaction and other deal related expenses; (vii) share-based compensation expense, and (viii) other non-recurring adjustments. Management defines Adjusted EBITDA Margin as Adjusted EBITDA divided by Revenue.
Previous wording
Represents the compensation expense under our share-based plans and deferred compensation plans.
Current wording
Represents the compensation expense under our share-based plans and deferred compensation plans. Includes $7.5 million for employer taxes related to vested RSUs for the three and six months ended June 30, 2026.
Previous wording
We measure Free Cash Flow as Net cash provided by (used in) operating activities less Capital expenditures. Free Cash Flow Conversion is calculated as Free Cash Flow divided by Net income (loss). The following table sets forth a reconciliation of Net cash provided by (used in) operating activities, the most comparable GAAP financial measure, to Free Cash Flow for the periods presented:
Current wording
We measure Free Cash Flow as Net cash provided by operating activities less Capital expenditures. Free Cash Flow Conversion is calculated as Free Cash Flow divided by Net income (loss). The following table sets forth a reconciliation of Net cash provided by operating activities, the most comparable GAAP financial measure, to Free Cash Flow for the periods presented:
Previous wording
Historically, our primary sources of liquidity have been cash and cash equivalents, cash flows from our operating activities and borrowings under our credit agreements, including revolving credit facilities. Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs. As we continue to expand our business, we may require additional working capital in the future for increased costs, and although we believe that we will be able to fully fund our ongoing capital expenditures, working capital requirements and other capital needs for the foreseeable future through cash on hand and cash flows from our operating activities, we may choose to use borrowings under our credit facilities to finance our operating and investing activities. Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our credit agreements will be sufficient to fund our cash requirements for at least the next twelve months. As of March 31, 2026, we had $2,630.1 million of borrowings outstanding under the Term Loan Credit Facility, and a $250.0 million commitment under our delayed draw term loan (“DDTL”), of which $49.0 million had been borrowed as of March 31, 2026. We had no outstanding balance under our senior secured revolving credit facility (the “Revolving Credit Facility”) and $3.7 million letters of credit were utilized, resulting in an available borrowing capacity of $396.3 million on the Revolving Credit Facility.
Current wording
Historically, our primary sources of liquidity have been cash and cash equivalents, cash flows from our operating activities and borrowings under our credit agreements, including revolving credit facilities. In April 2026, the Company completed its IPO of shares of Class A common stock. Net proceeds from the IPO were $1,220.6 million, after deducting underwriting discounts, commissions and offering costs. A portion of the net proceeds was used to repay $946.0 million of outstanding indebtedness under the Company’s Term Loan Credit Facility, with the remainder to be used for working capital and general corporate purposes. Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs. As we continue to expand our business, we may require additional working capital in the future for increased costs, and although we believe that we will be able to fully fund our ongoing capital expenditures, working capital requirements and other capital needs for the foreseeable future through cash on hand and cash flows from our operating activities, we may choose to use borrowings under our credit facilities to finance our operating and investing activities. Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our credit agreements will be sufficient to fund our cash requirements for at least the next twelve months.
Previous wording
The following table sets forth the major components of our unaudited condensed combined statements of cash flows for the periods presented:
Current wording
The following table sets forth the major components of our unaudited condensed consolidated statements of cash flows for the periods presented:
Previous wording
Cash provided by operating activities increased by $15.7 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to an increase in Net income, adjusted for non-cash items, of $30.1 million, offset by an increase in cash outflow from contract assets and liabilities of $11.9 million and the cash impacts of changes in working capital of $4.3 million. Our overall decrease in working capital performance was primarily attributable to a decrease of $36.3 million in Accounts payable and Accrued expenses and other current liabilities for the timing of vendor and bonus payments, an increase of $8.7 million in Accounts receivable primarily due to higher revenue for increased customer demand, offset by a decrease of $30.4 million in Prepaid expenses and other current assets primarily due to income tax receivables and a decrease of $10.3 million in Inventory primarily due to lower purchasing activity. The increase of $11.9 million in net contract assets was driven largely by the timing of progress billings.
Current wording
Cash provided by operating activities increased by $105.7 million for the six months ended June 30, 2026 as compared to the 2025 period, primarily due to an increase in Net income, adjusted for non-cash items, of $144.2 million, partially offset by an increase in cash outflow from the cash impacts of changes in working capital of $23.8 million. Our overall decrease in working capital performance was primarily attributable to a decrease of $28.4 million in Accounts payable and Accrued expenses and other current liabilities for the timing and amount of vendor payments, an increase of $24.7 million in Accounts receivable primarily due to higher revenue, partially offset by a decrease of $15.1 million in Inventory primarily due to lower purchasing activity and a decrease of $14.2 million in Prepaid expenses and other current assets primarily due to income tax receivables. In addition to the decrease in overall working capital, cash outflow from net contract liabilities increased by $14.2 million, which was primarily due to the timing of progress billings.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2026 was $80.5 million, andrelated to $68.8 million cash consideration paid for acquisitions and $11.7 million of capital expenditures.
Current wording
Net cash used in investing activities for the six months ended June 30, 2026 was $208.0 million, andrelated to $185.8 million cash consideration paid for acquisitions and $22.3 million of capital expenditures.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2025 was $57.2 million, andrelated to $48.5 million cash consideration paid for acquisitions and $8.8 million of capital expenditures.
Current wording
Net cash used in investing activities for the six months ended June 30, 2025 was $171.8 million, andrelated to $152.6 million cash consideration paid for acquisitions and $21.4 million of capital expenditures.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2026 was $33.5 million, andprimarily related to $25.0 million of proceeds from the issuance of debt, $11.3 million in contributions, and $4.4 million of proceeds from the settlement of related party notes receivable, partially offset by $6.8 million of debt repayments.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2026 was $279.2 million, andprimarily related to proceeds from the Company's IPO of $1,227.8 million, $25.0 million of proceeds from the issuance of debt, $11.3 million in contributions, and $5.4 million of proceeds from the settlement of related party notes receivable, partially offset by $952.8 million of debt repayments.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2025 was $80.5 million, andprimarily related to $54.8 million of proceeds from the issuance of debt, net of debt repayments and debt financing fees, and $385.0 million in contributions. This was partially offset by $350.3 million in distributions and $7.0 million of repayments of related party payables.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2025 was $171.3 million, andprimarily related to $146.7 million of proceeds from the issuance of debt, net of debt repayments and debt financing fees, and $385.0 million in contributions, partially offset by $351.1 million in distributions and $7.0 million of repayments of related party payables.
Previous wording
On February 26, 2025, wholly-owned subsidiaries of the Arxis Businesses entered into the Credit Agreement with a consortium of banks, led by Citibank N.A. Borrowings under the Term Loan Credit Facility mature on, and remaining commitments under the DDTL thereunder terminate on, February 26, 2032. We may draw on the DDTL until February 26, 2027. Borrowings under the Revolving Credit Facility mature on, and remaining commitments under the Revolving Credit Facility terminate on, February 26, 2030. The Credit Agreement contains customary conditions on the availability of commitments thereunder, including that our consolidated first-lien net leverage ratio is below specified thresholds. The interest rates on borrowings under the Revolving Credit Facility, DDTL, and Term Loan Credit Facility are calculated in accordance with the Credit Agreement and based on our consolidated first-lien net leverage ratio. We have the right to prepay borrowings at any time, subject to certain prepayment premiums applicable in connection with prepayments resulting from certain repricing events. We are obligated to prepay borrowings under certain circumstances, including using excess cash flows and proceeds from certain asset sales, casualty events and from issuances or incurrences of certain indebtedness. The obligations under the Credit Agreement are guaranteed by the restricted subsidiaries of the borrowers and, pursuant to the related holdings guarantee, which is filed as an exhibit to the registration statement of our Prospectus forms a part, by the holding companies of the borrowers, which holding companies are also our wholly-owned subsidiaries. The obligations under the Credit Agreement are secured by substantially all of our assets, which security interests are granted pursuant to the related security agreement, which is filed as an exhibit to the registration statement of our Prospectus.
Current wording
We may draw on the DDTL until February 26, 2027. Borrowings under the Revolving Credit Facility mature on, and remaining commitments under the Revolving Credit Facility terminate on, February 26, 2030. The Credit Agreement contains customary conditions on the availability of commitments thereunder, including that our consolidated first-lien net leverage ratio is below specified thresholds. The interest rates on borrowings under the Revolving Credit Facility, DDTL, and Term Loan Credit Facility are calculated in accordance with the Credit Agreement and based on our consolidated first-lien net leverage ratio. We have the right to prepay borrowings at any time, subject to certain prepayment premiums applicable in connection with prepayments resulting from certain repricing events. We are obligated to prepay borrowings under certain circumstances, including using excess cash flows and proceeds from certain asset sales, casualty events and from issuances or incurrences of certain indebtedness. The obligations under the Credit Agreement are guaranteed by the restricted subsidiaries of the borrowers and, pursuant to the related holdings guarantee, which is filed as an exhibit to the registration statement of which our Prospectus forms a part, by the holding companies of the borrowers, which holding companies are also our wholly-owned subsidiaries. The obligations under the Credit Agreement are secured by substantially all of our assets, which security interests are granted pursuant to the related security agreement, which is filed as an exhibit to the registration statement of our Prospectus.
Previous wording
We have future obligations under various contracts relating to debt and interest payments, finance and operating leases. During the three months ended March 31, 2026, there were no material changes to these obligations as described in our December 31, 2025 audited annual financial statements included in the Prospectus.
Current wording
We have future obligations under various contracts, including finance and operating leases. During the six months ended June 30, 2026, there were no material changes to these obligations as described in our December 31, 2025 audited annual financial statements included in the Prospectus.
Previous wording
Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed combined financial statements and the related notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). In preparing the unaudited condensed combined financial statements, we apply accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect our underlying business and economic conditions. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances. We regularly re-evaluate our estimates used in the preparation of the condensed combined financial statements based on our latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. There have been no material changes to our critical accounting policies and estimates as described in our Prospectus.
Current wording
Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements and the related notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). In preparing the unaudited condensed consolidated financial statements, we apply accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect our underlying business and economic conditions. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances. We regularly re-evaluate our estimates used in the preparation of the condensed consolidated financial statements based on our latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. Other than as described below, there have been no material changes to our critical accounting policies and estimates as described in our Prospectus.
Previous wording
Refer to “Note 2. Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” in our December 31, 2025 annual financial statements reported in the Prospectus for additional information.
Current wording
Refer to “Note 2. Summary of Significant Accounting Policies—Recent Adopted Accounting Pronouncements” in our December 31, 2025 annual financial statements reported in the Prospectus for additional information.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
For the six months ended June 30, 2026 as compared to the 2025 period, growth across all end markets reflected the combined benefit of higher sales volume and favorable pricing actions. Volume growth reflected increased customer demand across key programs and applications, as well as contributions from new business wins, contributing low-teens growth across all our end markets. Pricing contributed a mid-single-digit increase across each of our end markets, reflecting contractual price escalations and price realization actions.
Current report — wording carried from elsewhere
As of June 30, 2026, we had $1,732.9 million of borrowings outstanding under the Term Loan Credit Facility, and a $201.0 million commitment under our delayed draw term loan (“DDTL”), all of which was undrawn as of June 30, 2026. We had no outstanding balance under our senior secured revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan Credit Facility and DDTL, the "Credit Facilities") and $3.7 million letters of credit outstanding, resulting in an available borrowing capacity of $396.3 million on the Revolving Credit Facility.
Current report — wording carried from elsewhere
On February 26, 2025, wholly-owned subsidiaries of the Arxis Businesses entered into the Credit Agreement with a consortium of banks, led by Citibank, N.A. Borrowings under the Term Loan Credit Facility mature on, and remaining commitments under the DDTL thereunder terminate on, February 26, 2032. In June 2026, the Company amended the 2025 Credit Agreement to reduce the applicable interest rate margin by 25 basis points, reduce the available commitments on the 2025 DDTL from $250.0 million to $201.0 million, and amend the prepayment schedule such that the outstanding principal amounts are due in full at maturity.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Three Months Ended March 31, 2026 as compared to the Three Months Ended March 31, 2025