Applied Aerospace & Defense (AADX) Q3 2026: Record Revenue, Guidance Disappoints

Applied Aerospace & Defense posted record quarterly revenue of $182.1 million in Q3 2026, up 48.6% from $122.5 million a year earlier and ahead of the $170.4 million analyst consensus by 6.85%. GAAP earnings per share of $0.18 cleared the $0.1175 estimate by more than 53%. On the surface, it was a strong quarter across the board.

The revenue growth was broad-based. The Advanced Sensing and Precision Strike Systems segment alone contributed $36.3 million of the year-over-year increase, driven by higher volumes in integrated air and missile defense systems. Acquisitions completed in 2026 accounted for roughly half the total year-over-year revenue gain, with the remaining organic growth coming in at 20.3%.

The headline profit number deserves scrutiny. Net income came in at $30.6 million, but that figure was lifted significantly by a $24.2 million income tax benefit. Backing that out, pre-tax income for the quarter was $6.5 million, which is a meaningfully different picture than the bottom-line result implies.

The share price reaction turned negative after management issued full-year 2026 revenue guidance of $660 million to $670 million, missing the Street consensus of $682.4 million. That gap was enough to overshadow the quarterly beat and push shares lower. The company did raise its full-year Adjusted EBITDA target to a range of $137 million to $142 million.

The clearest reason for investors to stay engaged is the contract backlog, which stood at $1.26 billion as of September 30, 2026. CEO Trip Ferguson pointed to embedded positions on both enduring programs of record and next-generation programs as the basis for multi-year revenue visibility. Industry tailwinds including missile and munition rearmament, layered missile defense priorities, and rising global defense budgets underpin management's constructive longer-term tone even as near-term guidance disappointed.