Thank you for standing by. My name is Jonathan and I will be your conference moderator today. At this time, I would like to welcome everyone to the Arrow Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Jack Sneft, Investor Relations at Arrow. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Arrow Group Holdings, Inc. second quarter 2026 earnings call. We appreciate you joining us today and look forward to sharing an update on our progress and performance. With me on the call are Dr. Chirinjeev Kathuria, our Executive Chairman, Captain Joseph Burns, our Chief Executive Officer, and Dr. Mariya Pylypiv, our Chief Financial Officer. Today's call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to Arrow's 2026 outlook. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent management's beliefs and assumptions only as of the date made. Information on factors that could affect the company's financial results is included in the company's most recent annual report on Form 10-K and other filings with the SEC from time to time. In addition to our prepared remarks, our earnings press release, SEC filings, and a replay of today's call can be found on our investor relations website at investor.thearrowgroup.com. We have also posted our earnings presentation on the investor relations section of our website. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP financial measures and the discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalent is available in our earnings release. Additionally, we plan to discuss drone segment backlog, a definition of which can be found in our earnings release. We will also discuss our cash balance as of July 31st, 2026, which is a preliminary estimate based on information available to us as of the date of this presentation. Additional information on this metric can be found in the earnings presentation on our investor relations website. With that, I will turn it over to our Executive Chairman, Dr. Chirinjeev Kathuria.

Thanks, Jack, and thank you all for joining us today. Arrow delivered a strong second quarter that was marked by revenue outperformance against expectations driven by solid execution within our drone segment. Gross margins improved to 64%, and we swung to a small operating profit for the quarter. A big improvement from the loss we saw in the same period last year. Looking ahead, and as Maria will discuss in her section, we are reiterating full year revenue growth guidance of 15 to 25%. And she will detail some additional thoughts to think through the rest of the year. On top of this, total drone backlog grew roughly 9% from last quarter to approximately 163 million. On the strategic front, it was also a busy quarter. The RQ-35 drone achieved blue UAS certification. which opens up meaningful new opportunities in US defense procurement. We also unveiled our new RQ-70 long-range ISR platform. Development continues on the JC-250 and the JX-250 cargo and ISR drone variants. and costs there are coming in below expectations with the first flight still on track for later this year. We remain squarely focused on the unmanned drone market. Second quarter was a solid quarter of execution and we expect that momentum to continue as we scale manufacturing, diversify our revenue base and stay disciplined on cost, all while continuing to invest in Arrow's next phase of growth. With that, let me turn it over to Joe to discuss our strategy and the operational highlights.

Joe? Thank you, Chirinjeev, and thank you all for joining us on today's earnings call. I am happy to report second quarter results that exceeded expectations, finishing out a strong first half of the year. Our second quarter results were marked by on-time drone deliveries plus multiple announcements. These recent developments highlight our execution on strategy, but we are not done here. While second quarter top line results mark sequential growth versus our 1Q performance, this demonstrates the variable nature of our business. Still, second quarter results topped expectations and we are reiterating our full year guidance ranges we previously provided. Mariya will walk through the financial details later in the call. Now let me provide some updates on our portfolio and strategic positioning at Arrow. We have a solid, growing portfolio of products and services. We remain focused on the overall drone market whether it be through new product developments or through partnerships and inorganic opportunities. We are actively working to reduce quarterly variability by expanding our international and domestic revenue base. One such milestone on our product side and one that I'm especially pleased to highlight is that our RQ35 drone is now officially Blue UAS certified. With this approval, the RQ-35 is recognized by the Department of War as a secure, compliant unmanned aircraft system eligible for government and defense procurement under NDAA requirements. As most of you know, Blue UAS streamlines access to the DOW and federal procurement channels, accelerating our ability to compete for and secure U.S. defense contracts. which we expect will support Arrow's long-term revenue growth across domestic and international markets. We believe the Blue UAS milestone is a testament to the RQ35 from its embedded technology, use cases and performance on the battlefield. The RQ35 and now our recently unveiled RQ70 continue to set our technology apart from the rest of the pack. The RQ-35 is battle-tested, having been deployed in the Ukraine conflict, and the platform is extremely quiet, hand-launched, and purpose-built for ISR missions. It has demonstrated real resilience even against electronic warfare and in GPS and GNSS-denied environments. With up to 50 kilometers of range and 150 minutes of flight time, it delivers extended time on target plus quick frontline serviceability with a smart battery for reliable performance. The RQ35 platform also offers onboard AI with edge computing, which enables real-time identification and classification of enemy assets and threats, while strengthening navigation, situational awareness, and mission execution. This drives faster, more informed decisions in the field. As a note, edge computing brings our flying servers closer to the battle, allowing us to significantly speed up and improve target recognition and decision speed. This reduces the already jammed bandwidth required by other competitor systems. Our goal is to embed AI across all of our product and service offerings at Arrow. The RQ70 is our newest platform, built on years of RQ35 battle data and leveraging our existing manufacturing and NDAA supply chain. We are already engaged with multiple defense customers on future deployment. It offers configuration flexibility between standard, long-range, and VTOL configurations, and includes a modular design that lets it serve as a standalone ISR drone for NATO and allied customers. Our RQ-70 is built for up to eight hours of endurance, 100 kilometers of range and resilience in GPS denied environments. We are reaffirming expected production start in January, 2027. Capabilities such as these further set Aero apart with strong customer validation to date. We are building on that momentum with new initiatives and will continue to provide updates in the quarters ahead. On the product side, we're making great progress developing our cargo and ISR drone variants, the JC250 and JX250. We have been strategically evaluating and selecting suppliers for the vehicle, and we are reaffirming our expectation for the first flight later this year. I am also happy to report that aerospecific costs for development are running below our internal expectations by low double-digit percent. There are a few driving factors. First, because the cargo and ISR variants share a common foundation, we are developing them at a fraction of the cost of their passenger counterpart. Second, we have made real progress in supply chain negotiations, which is lowering our input costs. Third, we are realizing synergies across the platform faster than we had modeled. And finally, our R&D team has been executing efficiently, which is keeping development costs disciplined. Taken together, these factors are giving us confidence in the cost trajectory of this program. While still in the early innings, all the developments that I mentioned represent our efforts in diversifying our product portfolio and stabilizing revenue variability over time. On the avionics and electronics side of our portfolio, Arrow delivered largely flat revenue quarter over quarter as demand for our avionics products remained stable and consistent with the prior quarter. Despite the static growth year to date, we are actively advancing next generation sensor and navigation solutions, which were on display at the EAA Air Show in Oshkosh in late July. We receive solid feedback at the trade show, with customers highlighting our product reliability and functionality. Avionics continues to play a critical and strategic role within our broader company profile. With our avionics and ramping U.S. drone operations now consolidated under one roof in Phoenix, we expect synergies here to begin bearing fruit in the coming quarters. These dynamics are part of what reinforces Aero's long-term competitive advantage. Over time, we expect to bring more avionics systems in-house across our unmanned platforms, streamlining operations, reducing supply chain complexity, and ultimately strengthening our gross margin profile. Lastly, on the services side, we are continuing to evaluate strategic alternatives for training, and we expect to have an update on that direction by the end of the year. We believe the training segment remains a valuable asset with a significant long-term opportunity, although the segment is capital-intensive and often requires meaningful ongoing investment. Recall, while underlying demand persists within this segment, performance here has been below expectations. This is driven by the fact that the task orders coming out of the U.S. government are not within the strengths of Arrow. We believe this narrative will shift over time, and we are positioning, investing, and strengthening our training asset to pursue upcoming long-term close air support training opportunities. That said, we are exploring all possible avenues for the business, but our focus remains on unmanned systems. Overall, we are encouraged by the momentum generated across our portfolio during the second quarter. from achieving blue UAS certification for the RQ35 and advancing customer engagement around our new RQ70 platform to progressing development of our cargo and ISR drone variants and positioning our avionics business for future synergies, we continue to execute on our strategy of expanding capabilities, diversifying revenue streams, and embedding AI across our offerings. While there is still work ahead, we believe these milestones reinforce the strength of our technology and market position, and we look forward to building on this momentum in the quarters to come. We remain disciplined on our capital initiatives. We continue to evaluate inorganic opportunities carefully, focusing on acquisitions that would be accretive in the near term and that strategically enhance our product portfolio, namely for drones, avionics, and electronics. We also see M&A as having the potential to play an important role in reducing Arrow's quarterly revenue variability over time. As I have discussed in the past, our balance sheet gives us real flexibility to act when the right opportunity comes along, and selective M&A will continue to play a vital role in how we endeavor to maximize long-term shareholder value. With the multiple drone deliveries in 2Q, and given the timing of these drone deliveries at quarter end, our cash balance as of July 31st, 2026 was approximately 56 million, significantly strengthening Arrow's balance sheet. In closing, the initiatives, discipline and efforts we have employed to date bolster our strategy of delivering mission-ready ISR systems that can be reduced, upgraded and supported at scale. I am also grateful for the colleagues beside me today and for every employee who makes this company what it is. Our leadership team brings extensive industry experience to the table, and as we continue to add key personnel, we are further strengthening our competitive position in the market. With that, I will turn it over to Mariya, who will walk you through the financial results in more detail. Mariya?

Thank you, Joe, and good morning, everyone. For the second quarter of 2026, revenue was $43.2 million compared to $24.6 million in the second quarter of 2025. This represents growth of nearly 76% year over year. Revenue for the quarter was ahead of expectations, driven by outperformance against expectations in our drone segment, partially offset by underperformance in avionics and training. Gross profit for the quarter was $27.7 million, representing a gross margin of 64%, compared to a gross profit of $15 million and gross margin of 61% versus the same period last year. The improvement in growth margins, both sequentially and year-over-year, was also driven by a product mix shift back towards drone products, consistent with expectations. Recall, our first quarter margins were impacted by upgrade revenue negatively impacting margins. Operating income for the quarter was $1.7 million versus negative $19.7 million in the second quarter of 2025. This year-over-year improvement is a result of higher revenue, improved growth margins, and IPO-related costs incurred in the prior year period. We remain disciplined on costs while continuing to invest selectively in the infrastructure needed to support our growth. Our second quarter net loss was $2 million versus the net income of $5.9 million in the second quarter 2025. Second quarter 2026 EBITDA was 5.1 million compared to 18.9 million in the prior year period. On the adjusted basis, EBITDA was 6.8 million up from 4.7 million in the second quarter 2025. As Joe mentioned, on the cost side for our JC250 and JX250 platform, I am happy to report that development costs are tracking below our internal expectations. The shared foundation between our cargo and ISR variants means we are developing them at a fraction of the cost of the passenger version, and we are realizing savings beyond our original projections by roughly low double-digit percentage. We retain flexibility to adjust our spending pace up or down as conditions warrant. Right now, though, we believe the right path forward is delivered, efficient investment to put the required infrastructure in place to support our next phase of growth. Turning to cash flow and liquidity, as of June 30, 2026, we had $25.9 million in cash on the balance sheet, with 6.8 million in debt. Accounts receivables were higher than usual at quarter end, driven by the multiple drone deliveries late in the quarter. As of July 31, we had approximately 56 million of cash, primarily reflecting the subsequent collection of international drone receivables outstanding at quarter end. This strengthened our liquidity position and provides us with continued flexibility to execute against our strategic priorities. As of June 30, 2026, we had roughly $163 million in drawn backlog. We expect the majority of this backlog to convert to revenue within the next 12 months. We will be updating our backlog to include U.S. opportunities and ongoing pursuits in the coming quarters. We expect this will meaningfully increase the total backlog as those orders are incorporated. We define backlog as orders we reasonably expect to convert to revenue over the next 12 months. While this metric provides visibility into near-term demand, our broader pipeline continues to expand, underscoring the long-term demand trends we have discussed throughout today's call. Based on our current visibility, we are reiterating our full-year revenue growth guidance of 15% to 25% year-over-year. Let me provide some additional context on the expected cadence for the remainder of the year. First, one material drone delivery originally expected in the third quarter was completed in the second quarter. As a result, first half revenue represented approximately 50% of our current full year expectations. Second, reflecting that pull forward, we currently expect second half revenue to be in line with or modestly above first half revenue. Within the second half, we expect third quarter revenue to decline sequentially from second quarter, followed by stronger first quarter. We currently expect first quarter revenue to be modestly above second quarter. Third, given the international nature of our business, foreign exchange remains a factor in our outlook. We now anticipate greater FX headwinds in the second half, with an incremental revenue impact of few million dollars compared with our prior expectations. We have incorporated that impact into our outlook and remain confident in our full-year guidance range. We continue to expect modest gross margin compression versus 2025, with full year gross margin broadly in line with first half levels. Turning to profitability, we continue to expect full year 2026 adjusted EBITDA in the negative mid to high teens millions, with the quarterly cadence expected to broadly fall of revenue. In closing, our strategy remains focused on three priorities, diversifying our revenue base, scaling manufacturing, and accelerating new product introductions. As those products ramp up and make up a larger share of revenue, we expect that to reduce quarterly volatility and strengthen backlog growth over time. Specifically, with the introduction of the RQ70, the first delivery of Zentra camera suit and the JC and JX250 coming online late next year, we expect to begin seeing the benefits of that revenue stability next year, with continued improvements in the quarter and years that follow. That progress is exactly why fiscal year 26 is the year of accelerated investment for us. As I have said before, we are still early in our growth phase and we intend to invest accordingly while staying disciplined on costs and preserving flexibility to adjust our cost structure as needed. That balance supports our confidence in Aero's long-term growth trajectory. With that, operator, we are ready for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Colin Canfield from Cantor Fitzgerald. Your line is now open. Please go ahead.

Hey, thank you for the question. Maybe if we can start on drone order trends. If you can parse out the mix of U.S. and international drone orders for RQ-35, discuss the milestones that you need to see to essentially increase the backlog, the comment you made on Thank you. Hi, Colin. Thank you for your question. So I'll start. So our 163 million backlog represents international drone backlog and does not currently include any US backlog.

We expect that the majority of that backlog will convert into revenue over the next 12 months. So naturally, the portion of it extends into 2027. In terms of the US, we have responded to a number of RFQs and continue to see a growing pipeline of opportunities. and as those opportunities convert into orders and we expect them to be able to convert into backlog, it will provide additional visibility for US backlog, which will incrementally add to 163 backlog we're currently reporting today. As far as additional products being included, it's mostly composed out of RQ35. There is a very small percentage of RQ70 being added to this number right now.

And this is Joe. Good morning, Colin. If I could follow on with that. Some of the milestones, obviously key milestones for us were the Blue UAS certification, which will allow us into the U.S. market. So that was a big one. The RQ70 announcement and launch of that product are also a big milestone to enhance our expansion of our margin profile. You also mentioned or asked a question about early customer interest in the RQ70. It's been very strong because it does fill a gap in sort of that high-end ISR market, that long-duration flight, ease of operations, and low cost. So we feel very, very strong about the RQ70 filling in the interest category as well.

Got it. Thank you for that. Maybe if we could talk about pre-cash flow building blocks and kind of the level of investment Thank you.

Thank you, Colin. So I'll start and then I'll let you add anything I missed. So in terms of free cash flow, we are very comfortable right now with our liquidity position and it's closely tracking our internal expectations. The biggest factor for the quarter was timing as we were building inventory to support deliveries and as those deliveries occurred, At the end of the quarter, a significant portion of receivables converted into cash. And as I mentioned earlier, as of July 31st, our cash and cash equivalents were approximately 56 million. In terms of investments for the air mobility, our costs have been reduced, which air is very comfortable with. Right now, they're running in a low double digits below initial expectations. And While we have not provided the size of the investments, we are still tracking on time. And overall, because we shifted our focus on ISR and cargo drones, it significantly reduced our expected developmental costs compared to the passenger platform, which obviously provides significant up for our liquidity. And if we think about moving forward, free cash flow is We anticipate there should be a shift into positive cash flow 2027 and beyond.

And to expand on the JX250 and the JC250, our ISR and cargo variants of that large cargo transport. We've talked about in the past about eVTOL. This is an eVTOL aircraft, but it's different than what we had previously discussed in the passenger realm. We don't carry passengers on this. It's basically a large cargo drone. Very long duration. Hybrid drive can use conventional fuels. We think there is a new and growing market for this type of transport if you think about sort of combat operations, the ability to resupply, get critical medical information to and from, etc. So for us, it's a real opportunity to jump into somewhat of a new market. You're starting to see that, obviously, in this industry as well.

Thank you. As a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Your next question comes from the line of Andre Madrid from U.S. Bancorp BTIG. Your line is now open. Please go ahead.

Yep. Thanks, team. Good morning. I was wondering if you could provide us an update on where you're at with Nord and Bullitt, those JVs.

Sure. This is Joe. Good question, Andre. So as you probably know at this point, there are some significant order issues or significant issues with the Ukrainian government's permitting process. in their current battle condition, the government there has pretty much stopped all licensing of aircraft coming into the US or technology transfers. We are still working there very well, and we're working extensively with both council over there and local council to get the permits. But that said, the partnerships and JVs like these are really a compelling route for us. And I want to make it clear that we're not dependent on any one of them for growth. The partnership of JVs will expand our access to multiple markets and help accelerate our growth plans. And we're currently evaluating additional partnerships as well in this particular market, and those specifically for drone dominance. So we're excited about other opportunities. It's really opened our eyes as to what's available, what the markets look like for us. And with the ability for our certification routes, we're excited about participating in these things moving forward.

That's really helpful.

And then maybe pivoting to training for a bit. I know you guys had mentioned last quarter your decision to pursue strategic alternatives or consider strategic alternatives there. I mean, is there any update that you can provide as to maybe how that's tracking and when the decision might be made?

Sure, we're planning to have decisions by year end. We're making a lot of discussions around it. You know, as we mentioned before, we're actively evaluating a range of strategic options. And our intent in disclosing this is to be transparent with the market, while really our core focus right now is on drone and avionics operations. and we see limited synergies between training segment in our core business, which is important while we're evaluating the long term strategic fit. Training is expensive. We have made a significant investment so far, but we're still excited about the opportunities in this particular business. But but as always, drones are our main focus and that's where we want to look at focusing most of our most of our capital.

Yeah, that's really helpful, Joe. I appreciate it. I'll leave it there. Thanks. Thank you.