What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-12-10 compared with 2025-09-10 · 154 added, 60 removed, 148 unchanged (59% of the section changed)

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Changes in variable consideration associated with the finalization of undefinitized contract actions could result in cumulative catch up adjustments to revenue that could be material.

During the three months ended August 2, 2025 and July 27, 2024, changes in accounting estimates on contracts recognized using the over time method are presented below.

During the three and six months ended November 1, 2025 and October 26, 2024, changes in accounting estimates on contracts recognized using the over time method are presented below.

Amounts representing contract change orders or claims are included in revenue if the order or claim meets the criteria of a contract or contract modification in accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).

For the three months ended August 2 , 2025 and July 27, 2024, favorable and unfavorable cumulative catch-up adjustments included in revenue were as follows (in thousands):

For the three months ended November 1 , 2025 and October 26, 2024, favorable and unfavorable cumulative catch-up adjustments included in revenue were as follows (in thousands):

Three Months Ended

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Net (unfavorable) favorable adjustments

For the three months ended August 2 , 2025 , favorable cumulative catch-up adjustments of $2.3 million were primarily due to cost adjustments on 13 contracts, which individually were not material.

For the three months ended November 1 , 2025 , favorable cumulative catch-up adjustments of $3.0 million were primarily due to cost adjustments on 13 contracts, which individually were not material.

For the same period, unfavorable cumulative catch-up adjustments of $6.3 million were primarily related to higher than expected costs on 19 contracts, which individually were not material.

For the three months ended July 27, 2024, favorable cumulative catch-up adjustments of $0.8 million were primarily due to final cost adjustments on 11 contracts, which individually were not material.

For the three months ended October 26, 2024, favorable cumulative catch-up adjustments of $8.9 million were primarily due to final cost adjustments on five contracts.

During the three months ended October 26, 2024, we definitized certain Loitering Munitions Systems (“LMS”) undefinitized contract actions.

The aggregate impact of these cumulative catch-up revenue adjustments for the contract definitization was an increase to revenue of approximately $9.9 million.

The remaining adjustments individually were not material.

For the same period, unfavorable cumulative catch-up adjustments of $1.9 million were primarily related to higher than expected costs on 26 contracts, which were not individually material.

For the six months ended November 1, 2025 and October 26, 2024, favorable and unfavorable cumulative catch-up adjustments included in revenue were as follows (in thousands):

Six Months Ended

Gross favorable adjustments

Gross unfavorable adjustments

Net favorable (unfavorable) adjustments

For the six months ended November 1 , 2025 , favorable cumulative catch-up adjustments of $2.2 million were primarily due to cost adjustments on 19 contracts, which individually were not material.

For the same period, unfavorable cumulative catch-up adjustments of $10.5 million were primarily related to higher than expected costs on 17 contracts, which individually were not material.

For the six months ended October 26, 2024, favorable cumulative catch-up adjustments of $10.3 million were primarily due to final cost adjustments on four contracts.

During the six months ended October 26, 2024, we definitized certain LMS undefinitized contract actions.

The aggregate impact of these cumulative catch-up revenue adjustments for the contract definitization was an increase to revenue of approximately $9.9 million.

The remaining adjustments individually were not material.

For the same period, unfavorable cumulative catch-up adjustments of $1.7 million were primarily related to higher than expected costs on 26 contracts, which were not individually material.

Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired.

Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business or political climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

Our evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

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These changes in estimates resulted in the recognition of a goodwill impairment charge of $18.4 million during the three months ended April 30, 2025 in the UGV reporting unit.

We determined that it was more likely than not that the fair value of our other reporting units were more than their carrying values as of the annual goodwill impairment test date.

We determined that it was more likely than not that the fair values of our other reporting units were more than their carrying values as of the annual goodwill impairment test date.

As such, during the most recent annual impairment test during the fourth quarter of fiscal year 2025, the estimated fair value of all reporting units, other than UGV, substantially exceeded their carrying value.

As of August 2 , 2025 , we have not identified any events or circumstances that could trigger an impairment review prior to the Company’s annual impairment test, including taking into account the reporting units identified from the BlueHalo acquisition on May 1, 2025.

As of November 1 , 2025 , we have not identified any events or circumstances that could trigger an impairment review prior to the Company’s annual impairment test, including taking into account the reporting units identified from the BlueHalo acquisition on May 1, 2025.

The estimates and assumptions used to determine the fair value of our reporting units are highly subjective in nature.

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The following tables set forth our results of operations for the periods indicated (in thousands):

Three Months Ended August 2, 2025 Compared to Three Months Ended July 27, 2024

Three Months Ended November 1, 2025 Compared to Three Months Ended October 26, 2024

Three Months Ended

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Other (loss) income:

Interest income (expense), net

Other income, net

(Loss) income before income taxes

Benefit from income taxes

Equity method investment income, net of tax

Net (loss) income

Three Months Ended November 1, 2025

Segment adjusted EBITDA

Three Months Ended October 26, 2024

Segment adjusted EBITDA

Revenue for the three months ended November 1 , 2025 was $472.5 million, as compared to $188.5 million for the three months ended October 26, 2024, representing an increase of $284.0 million, or 151%.

The increase in revenue was due to an increase in product revenue of $173.8 million and an increase in service revenue of $110.2 million.

The increase in product revenue was primarily due to the $134.4 million of product revenue resulting from our acquisition of BlueHalo in May 2025.

Legacy AV product revenue included in the AxS segment increased by $39.4 million driven by an increase in LMS products due to increased global demand for our Switchblade products associated with current global conflicts as well as U.S.

resupply and medium uncrewed aircraft systems (“MUAS”) products due to increase in domestic and international demand, partially offset by a decrease in small uncrewed aircraft systems (“SUAS”) due to a decrease in international sales.

The increase in service revenue was primarily due to the $110.7 million service revenue resulting from our acquisition of BlueHalo.

Legacy AV service revenue, included in the AxS segment, remained consistent as, training and repairs service revenue decreased by $0.3 million and customer funded R&D and engineering services decreased by $0.2 million driven.

Proportion of service revenue to product revenue is expected to remain higher following the acquisition of BlueHalo.

Cost of Sales.

Cost of sales for the three months ended November 1 , 2025 was $368.4 million, as compared to $114.8 million for the three months ended October 26, 2024, representing an increase of $253.6 million, or 221%.

The increase in cost of sales was a result of an increase in product cost of sales of $154.3 million and an increase in service costs of sales of $99.3 million.

The increase in product costs of sales was primarily due to an increase of approximately $95.6 million associated with the recently acquired BlueHalo product lines and an increase of approximately $20.9 million in

intangible amortization related to the BlueHalo acquisition.

For legacy AV business, product cost of sales increased $37.8 million.

The increase in legacy product costs of sales was primarily due to an increase of approximately $22 million due to the increase in sales volume and approximately $16 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production.

The increase in service cost of sales was primarily due to an increase of approximately $102.2 million associated with the BlueHalo acquisition, partially offset by a decrease in legacy AV service cost of sales of $2.6 million primarily due to a mix shift of approximately $2 million due to a higher proportion of higher margin services driven by an increase in customer funded R&D.

Cost of sales for the three months ended November 1 , 2025 included $24.2 million of intangible amortization and other related non-cash purchase accounting expenses as compared to $3.7 million for the three months ended October 26, 2024.

As a percentage of revenue, cost of sales increased from 61% to 78% primarily due to increased amortization and other non-cash purchase accounting expenses and an increase in the proportion of service revenue resulting from the effect of the BlueHalo acquisition, resulting in gross margin decreasing from 39% to 22%.

Gross Margin.

Gross margin is equal to revenue minus cost of sales.

Selling, General and Administrative .

SG&A expense for the three months ended November 1 , 2025 was $98.3 million, or 21% of revenue, as compared to SG&A expense of $37.9 million, or 20% of revenue, for the three months ended October 26, 2024.

The increase in SG&A expense was primarily due to an increase of $22.9 million of intangible amortization expense related to the BlueHalo acquisition, an increase of approximately $11 million of employee related expenses related to the increase in headcount and an increase of $4.6 million of acquisition related expenses related to the BlueHalo acquisition.

Research and Development.

R&D expense for the three months ended November 1 , 2025 was $36.0 million, or 8% of revenue, as compared to R&D expense of $28.7 million, or 15% of revenue, for the three months ended October 26, 2024.

The increase was primarily related to the BlueHalo acquisition.

R&D expense is expected to continue to be 7% to 8% of revenue.

Interest Income, net.

Interest income, net for the three months ended November 1 , 2025 was $4.7 million compared to interest expense, net of $0.7 million for the three months ended October 26, 2024 due to a combination of higher cash and investment balances and lower interest bearing debt balances.

Other Income, net.

Other income, net, for the three months ended November 1 , 2025 was $5.0 million as compared to $16 thousand for the three months ended October 26, 2024.

The increase was driven by unrealized gains in equity security investments.

Benefit from Income Taxes.

Our effective income tax rate was (11.2)% for the three months ended November 1 , 2025 , as compared to (3.5)% for the three months ended October 26, 2024.

The decrease in our effective income tax rate was primarily due to an increase in federal R&D tax credits, a decrease in FDII deductions, partially offset by an increase non-deductible acquisition related expenses combined with the net loss before income taxes for the quarter.

The effective income tax rate for the three months ended November 1, 2025 was primarily impacted by expected federal R&D tax credits, excess tax benefits from equity awards, and non-deductible acquisition related expenses.

Equity Method Investment Income, net of Tax.

Equity method investment income, net of tax for the three months ended November 1 , 2025 was $1.2 as compared $1.0 million for the three months ended October 26, 2024.

Autonomous Systems

Three Months Ended

Segment adjusted EBITDA

AxS revenue for the three months ended November 1 , 2025 was $301.6 million, as compared to $188.5 million for the three months ended October 26, 2024, representing an increase of $113.1 million, or 60%.

The increase in revenue was due to an increase in product and service revenues of $98.3 million and $14.8 million, respectively.

The increase in product revenue was primarily due to the $58.8 million of product revenue resulting from our acquisition of BlueHalo.

resupply and MUAS due to increased domestic and international demand, partially offset by a decrease in SUAS due to a decrease in international sales.

The increase in service revenue was primarily due to the $15.3 million of service revenue resulting from our acquisition of BlueHalo.

AxS Segment Adjusted EBITDA.

AxS segment adjusted EBITDA for the three months November 1 , 2025 was $51.4 million, as compared to $25.9 million for the three months ended October 26, 2024, representing an increase of $25.5 million, or 99%.

The increase in AxS segment adjusted EBITDA was primarily due to an increase in revenue of $113.1 million.

The increase in AxS segment adjusted EBITDA was partially offset by an increase in adjusted cost of sales of $77.2 million, adjusted SG&A of $7.2 million primarily due employee related costs driven by the increased headcount, and R&D of $3.4 million.

The increase in adjusted cost of sales was primarily due to an increase of approximately $44 million associated with the recently acquired BlueHalo product lines, an increase of approximately $22 million due to the increase in sales volume and approximately $16 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production.

Space, Cyber and Directed Energy

Three Months Ended

Segment adjusted EBITDA

SCDE revenue for the three months ended November 1 , 2025 was $170.9 million, as compared to $0 for the three months ended October 26, 2024.

The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in revenue is a result of the acquisition.

SCDE Segment Adjusted EBITDA.

SCDE segment adjusted EBITDA for the three months November 1 , 2025 was $(6.5) million, as compared to $0 for the three months ended October 26, 2024.

The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in segment adjusted EBITDA is a result of the acquisition.

Six Months Ended November 1, 2025 Compared to Six Months Ended October 26, 2024

Six Months Ended

Cost of sales

Selling, general and administrative

Research and development

(Loss) income from operations

Interest expense, net

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Net (loss) income

Three Months Ended August 2, 2025

Six Months Ended November 1, 2025

Segment adjusted EBITDA

Three Months Ended July 27, 2024

Six Months Ended October 26, 2024

Segment adjusted EBITDA

Revenue for the three months ended August 2 , 2025 was $454.7 million, as compared to $189.5 million for the three months ended July 27, 2024, representing an increase of $265.2 million, or 140%.

Revenue for the six months ended November 1, 2025 was $927.2 million, as compared to $377.9 million for the six months ended October 26, 2024, representing an increase of $549.3 million, or 145%.

The increase in revenue was due to an increase in product revenue of $327.8 million and an increase in service revenue of $221.5 million.

The increase in product revenue was primarily due to the $258.1 million of product revenue resulting from our acquisition of BlueHalo in May 2025.

Legacy AV product revenue included in the AxS segment increased by $30.3 million driven by an increase in LMS products due to increased global demand for our Switchblade products associated with the current global

conflicts as well as U.S.

resupply, partially offset by a decrease in SUAS due to a decrease in international sales.

Legacy AV product revenue included in the AxS segment increased by $69.7 million driven by an increase in LMS products due to increased global demand for our Switchblade products associated with current global conflicts as well as U.S.

resupply and MUAS products due to increased domestic and international demand, partially offset by a decrease in SUAS due to a decrease in international sales.

The increase in service revenue was primarily due to the $222.2 million service revenue resulting from our acquisition of BlueHalo.

Legacy AV service revenue, included in the AxS segment remained consistent as training and repairs service revenue decreased $2.0 million driven by the decrease in SUAS product sales, partially offset by an increase of $1.8 million in customer funded R&D and engineering services driven by an increase in contractor-owned, contractor-operated (“COCO”) demand.

Legacy AV service revenue, included in the AxS segment, remained consistent as training and repairs service revenue decreased by $2.3 million driven by a decrease in SUAS product sales, partially offset by an increase in customer funded R&D and engineering services of $1.6 million.

Proportion of service revenue to product revenue is expected to remain higher following the acquisition of BlueHalo.

Cost of Sales.

Cost of sales for the three months ended August 2 , 2025 was $359.6 million, as compared to $108.0 million for the three months ended July 27, 2024, representing an increase of $251.6 million, or 233%.

Cost of sales for the six months ended November 1, 2025 was $728.0 million, as compared to $222.8 million for the six months ended October 26, 2024, representing an increase of $505.2 million, or 227%.

The increase in cost of sales was a result of an increase in product cost of sales of $299.5 million and an increase in service costs of sales of $205.7 million.

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For legacy AV business, product cost of sales increased $71.0 million.

The increase in legacy product costs of sales was primarily due to an increase of approximately $17 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production and approximately $16 million due to the increase in sales volume.

The increase in service cost of sales was primarily due to an increase of approximately $100 million associated with the BlueHalo acquisition and an increase of approximately $5 million intangible amortization related to the BlueHalo acquisition.

Cost of sales for the three months ended August 2 , 2025 included $37.4 million of intangible amortization and other related non-cash purchase accounting expenses as compared to $3.7 million for the three months ended July 27, 2024.

The increase in legacy product costs of sales was primarily due to an increase of approximately $38 million due to the increase in sales volume and approximately $33 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production.

The increase in service cost of sales was

primarily due to an increase of approximately $202.9 million associated with the BlueHalo acquisition and an increase of approximately $4.7 million intangible amortization related to the BlueHalo acquisition, partially offset by a decrease in legacy AV service cost of sales of $1.9 million primarily due to a mix shift of approximately $2 million due to a higher proportion of higher margin services driven by customer funded R&D.

Cost of sales for the six months ended November 1, 2025 included $61.6 million of intangible amortization and other related non-cash purchase accounting expenses as compared to $7.4 million for the three months ended October 26, 2024.

As a percentage of revenue, cost of sales increased from 59% to 79% primarily due to increased amortization and other non-cash purchase accounting expenses and an increase in the proportion of service revenue resulting from the effect of the BlueHalo acquisition, resulting in gross margin decreasing from 41% to 21%.

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Selling, General and Administrative .

SG&A expense for the three months ended August 2 , 2025 was $131.3 million, or 29% of revenue, as compared to SG&A expense of $33.8 million, or 18% of revenue, for the three months ended July 27, 2024.

The increase in SG&A expense was primarily due to an increase of $41.2 million of intangible amortization expense related to the BlueHalo acquisition, an increase of $23.7 million of acquisition related expenses related to the BlueHalo acquisition and an increase of $14.7 million of employee related expenses related to the increase in headcount.

SG&A expense for the six months ended November 1, 2025 was $229.6 million, or 25% of revenue, as compared to SG&A expense of $71.7 million, or 19% of revenue, for the six months ended October 26, 2024.

The increase in SG&A expense was primarily due to an increase of $64.1 million of intangible amortization expense related to the BlueHalo acquisition, an increase of $28.3 million of acquisition related expenses related to the BlueHalo acquisition and an increase of approximately $25 million of employee related expenses related to the increase in headcount.

Research and Development.

R&D expense for the three months ended August 2 , 2025 was $33.1 million, or 7% of revenue, as compared to R&D expense of $24.6 million, or 13% of revenue, for the three months ended July 27, 2024.

R&D expense for the six months ended November 1, 2025 was $69.1 million, or 7% of revenue, as compared to R&D expense of $53.3 million, or 14% of revenue, for the six months ended October 26, 2024.

The increase was primarily related to the BlueHalo acquisition.

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Interest Expense, net.

Interest expense, net for the three months ended August 2 , 2025 was $17.4 million compared to interest expense, net of $0.2 million for the three months ended July 27, 2024.

Interest expense, net for the six months ended November 1, 2025 was $12.7 million compared to $0.9 million for the six months ended October 26, 2024.

The increase was driven by the interest expense related to the Term Loan and Revolver Facility obtained on May 1, 2025 in conjunction with the BlueHalo acquisition and the unamortized debt issuance costs allocated to the Term Loan Facility of $6.7 million, which were expensed upon repayment of the Term Loan Facility in July 2025 using the proceeds from the Notes and common stock issuances in July 2025.

Other Income, net.

Other income, net, for the three months ended August 2 , 2025 was $2.4 million as compared to other expense, net of $0.2 million for the three months ended July 27, 2024.

The increase was driven by unrealized gains in equity security investments.

Other income, net, for the six months ended November 1, 2025 was $7.3 million compared to other expense, net of $0.2 million for the six months ended October 26, 2024.

The increase was primarily due to unrealized gains associated with the fair market value of our equity security investments.

(Benefit from) Provision for Income Taxes.

Our effective income tax rate was 18.0% for the three months ended August 2 , 2025 , as compared to 6.6% for the three months ended July 27, 2024.

The increase in our effective income tax rate was primarily due to an increase in federal R&D tax credits, a decrease in FDII deductions, partially offset by an increase non-deductible acquisition related expenses combined with the net loss before income taxes for the quarter.

The effective

income tax rate for the three months ended August 2, 2025 was primarily impacted by expected federal R&D tax credits, excess tax benefits from equity awards, and non-deductible acquisition related expenses.

Our effective income tax rate was (16.7)% for the six months ended November 1, 2025, as compared to 4.4% for the six months ended October 26, 2024.

The decrease in our effective income tax rate was primarily due to an increase in FDII deductions and excess tax benefits from the vesting of equity awards, partially offset by an increase in excess tax benefits from equity awards.

The effective income tax rate for the six months ended November 1, 2025 was primarily impacted by expected federal R&D tax credits and FDII deductions and excess tax benefits from equity awards.

Equity Method Investment Income, net of Tax.

Equity method investment income, net of tax for the three months ended August 2 , 2025 was $1.8 as compared $0.1 million for the three months ended July 27, 2024.

Equity method investment income, net of tax for the six months ended November 1, 2025 was $3.0 million as compared $1.1 million for the six months ended October 26, 2024.

Autonomous Systems

Three Months Ended

Six Months Ended

Segment adjusted EBITDA

AxS revenue for the three months ended August 2 , 2025 was $285.3 million, as compared to $189.5 million for the three months ended July 27, 2024, representing an increase of $95.8 million, or 51%.

AxS revenue for the six months ended November 1 , 2025 was $586.9 million, as compared to $377.9 million for the six months ended October 26, 2024, representing an increase of $209.0 million, or 55%.

The increase in revenue was due to an increase in product and service revenues of $179.5 million and $29.5 million, respectively.

The increase in product revenue was primarily due to the $109.8 million of product revenue resulting from our acquisition of BlueHalo.

resupply, partially offset by a decrease in SUAS due to a decrease in international sales.

resupply and MUAS products due to increased international and domestic demand, partially offset by a decrease in SUAS due to a decrease in international sales.

The increase in service revenue was primarily due to the $30.3 million of service revenue resulting from our acquisition of BlueHalo.

Proportion of service revenue to product revenue is expected to remain higher following the acquisition of BlueHalo.

AxS Segment Adjusted EBITDA.

AxS segment adjusted EBITDA for the three months August 2 , 2025 was $52.8 million, as compared to $37.1 million for the three months ended July 27, 2024, representing an increase of $16.0 million, or 42%.

AxS segment adjusted EBITDA for the six months November 1 , 2025 was $103.8 million, as compared to $63.1 million for the six months ended October 26, 2024, representing an increase of $40.7 million, or 65%.

The increase in AxS segment adjusted EBITDA was primarily due to an increase in revenue of $209.0 million.

The increase in AxS segment adjusted EBITDA was partially offset by an increase in adjusted cost of sales of $143.3 million, adjusted SG&A of $15.2 million primarily due employee related costs driven by the increased headcount, and R&D of $8.6 million.

The increase in adjusted cost of sales was primarily due to an increase of approximately $37 million associated with the recently acquired BlueHalo product lines, an increase of approximately $16 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production and approximately $16 million due to the increase in sales volume.

The increase in adjusted cost of sales was primarily due to an increase of approximately $81 million associated with the recently acquired BlueHalo product lines, an increase of approximately $38 million due to the increase in sales volume and approximately $33 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production.

Space, Cyber and Directed Energy

Three Months Ended

Six Months Ended

Segment adjusted EBITDA

SCDE revenue for the three months ended August 2 , 2025 was $169.4 million, as compared to $0 for the three months ended July 27, 2024.

SCDE revenue for the six months ended November 1 , 2025 was $340.3 million, as compared to $0 for the six months ended October 26, 2024.

The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in revenue is a result of the acquisition.

SCDE Segment Adjusted EBITDA.

SCDE segment adjusted EBITDA for the three months August 2 , 2025 was $3.8 million, as compared to $0 for the three months ended July 27, 2024, representing an increase of $3.8 million, or 100%.

SCDE segment adjusted EBITDA for the six months November 1 , 2025 was $(2.3) million, as compared to $0 for the six months ended October 26, 2024.

The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in segment adjusted EBITDA is a result of the acquisition.

Consistent with ASC 606, we define funded backlog as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract.

As of August 2 , 2025 , our funded backlog was approximately $1,066.4 million, as compared to $726.6 million as of April 30, 2025.

In addition to our funded backlog, we also had unfunded backlog of $3,092.1 million as of August 2 , 2025 .

As of November 1 , 2025 , our funded backlog was approximately $1,092.5 million, as compared to $726.6 million as of April 30, 2025.

In addition to our funded backlog, we also had unfunded backlog of $2,790.0 million as of November 1 , 2025 .

Unfunded backlog does not meet the definition of a performance obligation under ASC 606.

We define unfunded backlog as the total remaining potential order amounts under cost reimbursable and FFP contracts with (i) multiple one-year options and indefinite delivery, indefinite quantity (“IDIQ”) contracts, or (ii) incremental funding.

We define unfunded backlog as the total remaining potential order amounts under Cost Plus and FFP contracts with (i) multiple one-year options and indefinite delivery, indefinite quantity (“IDIQ”) contracts, or (ii) incremental funding.

Unfunded backlog does not obligate the customer to purchase goods or services.

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On October 4, 2024, we amended the Credit Agreement to increase the Revolving Facility to $200 million, and the Term Loan Facility was repaid in full and removed from the Credit Agreement.

Borrowings under the Credit Agreement may be used for working capital and other general corporate purposes, including acquisitions that meet certain parameters.

Borrowings under the Amended Credit Agreement may be used for working capital and other general corporate purposes, including acquisitions that meet certain parameters.

In February 2025, we borrowed $15.0 million under the Revolving Facility.

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The Amended Credit Agreement provides for an aggregate $700.0 million term loan and an aggregate $350.0 million revolving credit facility.

Upon effectiveness of the Amended Credit Agreement, we drew $225.0 million from the amended Revolving Facility and the full $700,000,000 of the Term Loan Facility.

Upon effectiveness of the Amended Credit Agreement, we drew $225.0 million from the amended Revolving Facility and the full $700.0 million of the Term Loan Facility.

The proceeds from the Term Loan Facility and the Revolving Facility were used to repay certain outstanding indebtedness of BlueHalo and to pay for certain related transaction costs.

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The Company used approximately $965.3 million of the net proceeds from the Common Stock Offering and the Notes Offering to repay indebtedness under the Term Loan Facility and outstanding borrowings under the Revolving Credit Facility, and the remainder is expected to be used for general corporate purposes, including to increase manufacturing capacity.

Our ability to borrow under the Revolving Facility is reduced by outstanding letters of credit of $11.9 million as of August 2, 2025.

As of August 2, 2025, approximately $338.1 million was available under the Revolving Facility.

Our ability to borrow under the Revolving Facility is reduced by outstanding letters of credit of $11.7 million as of November 1, 2025.

As of November 1, 2025, approximately $338.3 million was available under the Revolving Facility.

Refer to Note 9—Debt to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

In addition, Telerob has a line of credit of €7.0 million ($8.1 million) available for issuing letters of credit of which €2.3 million ($2.7 million) was outstanding as of August 2 , 2025 .

In addition, Telerob has a line of credit of €7.0 million ($8.1 million) available for issuing letters of credit of which €2.3 million ($2.7 million) was outstanding as of November 1 , 2025 .

We anticipate funding our normal recurring trade payables, accrued expenses, ongoing R&D costs and obligations under the Credit Facilities through our existing working capital and funds provided by operating activities including those provided by our acquisition.

The majority of our purchase obligations are pursuant to funded contractual arrangements with our customers.

We believe that our existing cash, cash equivalents, cash provided by operating activities and other financing sources will be sufficient to meet our anticipated working capital, capital expenditure requirements, and future

obligations related to the acquisition during the next twelve months.

There can be no assurance, however, that our business will continue to generate cash flow at current levels.

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Our future capital requirements, to a certain extent, are also subject to general conditions in or affecting the defense industry and are subject to general economic, political, financial, competitive, legislative and regulatory factors that are beyond our control.

Moreover, to the extent that existing cash, cash equivalents, cash from operations, and cash from our Credit Facilities are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing, subject to the limitations specified in the Amended Credit Facility Agreement.

Moreover, to the extent that existing cash, cash equivalents, cash from operations, and cash from our Credit

Facilities are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing, subject to the limitations specified in the Amended Credit Agreement.

In addition, we may also need to seek additional equity funding or debt financing if we become a party to any agreement or letter of intent for potential investments in, or acquisitions of, businesses, services or technologies.

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On FFP contracts, we typically are paid as we deliver products, and working capital is needed to fund labor and expenses incurred during the lead time from contract award until contract deliveries begin.

Certain contract have negotiated progress payments, which facilitates billing and collection as work is completed.

Certain contracts have negotiated progress payments, which facilitates billing and collection as work is completed.

Due to the OBBBA, which allows R&D expenditures to be deducted, we expect our cash taxes paid for U.S.

federal income taxes to be significantly reduced for the fiscal year ending April 30, 2026.

The following table provides our cash flow data for the three months ended August 2 , 2025 and July 27, 2024 (in thousands):

Three Months Ended

The following table provides our cash flow data for the six months ended November 1 , 2025 and October 26, 2024 (in thousands):

Six Months Ended

Net cash (used in) provided by operating activities

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Cash (Used in) Provided by Operating Activities.

Net cash used in operating activities for the three months ended August 2 , 2025 increased by $152.1 million to ($123.7) million, as compared to net cash provided by operating activities of $28.4 million for the three months ended July 27, 2024 .

The increase in net cash used in operating activities was primarily due to a decrease in cash as a result of changes in operating assets and liabilities of $157.8 million, largely related to increases in accounts receivable, unbilled receivables and retentions and decreases in accounts payable due to year over year timing differences as well as increases in inventory to meet demand.

Net cash used in operating activities for the six months ended November 1 , 2025 increased by $193.5 million to ($168.8) million, as compared to net cash provided by operating activities of $24.7 million for the six months ended October 26, 2024 .

The increase in net cash used in operating activities was primarily due to a decrease in cash as a result of changes in operating assets and liabilities of $229.3 million, largely related to increases in unbilled receivables and retentions and accounts receivable due to year over year timing differences as well as increases in inventory to meet demand.

The increase in cash used in operating activities was also driven by a decrease in net income of $113.2 million, partially offset by an increase in depreciation and amortization of $130.5 million, largely due to the intangibles and acquired property and equipment from the BlueHalo acquisition.

Cash Used in Investing Activities.

Net cash used in investing activities increased by $870.0 million to $876.6 million for the three months ended August 2 , 2025 , as compared to $6.6 million for the three months ended July 27, 2024 .

The increase in net cash used in investing activities was primarily due to the cash consideration for the acquisition of BlueHalo, net of cash acquired of $844.6 million.

Net cash used in investing activities increased by $1,146.1 million to $(1,157.7) million for the six months ended November 1 , 2025 , as compared to $(11.6) million for the six months ended October 26, 2024 .

The increase in net cash used in investing activities was primarily due to the cash consideration for the acquisition of BlueHalo, net of cash acquired of $844.6 million and the purchase of available-for-sale securities of $264.2 million.

Cash Provided by (Used in) Financing Activities.

Net cash provided by financing activities increased by $1,659.4 million to $1,645.4 million for the three months ended August 2 , 2025 , as compared to net cash used in financing activities of $(14.0) million for the three months ended July 27, 2024.

Net cash provided by financing activities increased by $1,662.8 million to $1,645.3 million for the six months ended November 1 , 2025 , as compared to net cash used in financing activities of $(17.5) million for the six months ended October 26, 2024.

The increase in net cash provided by financing activities was primarily due to proceeds from issuance of common shares of $968.5 million, net of underwriter costs and proceeds from the issuance of Notes of $726.9 million, net of underwriter costs.

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For a discussion of market risks at April 30, 2025, refer to Item 7A in our 2025 annual report on Form 10-K.

During the three months ended August 2, 2025, there were no material changes or developments that would materially alter the market risk assessment performed as of April 30, 2025, except as discussed below.

During the six

months ended November 1, 2025, there were no material changes or developments that would materially alter the market risk assessment performed as of April 30, 2025, except as discussed below.

Interest Rate Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis