AADX: Applying the right playbook; Initiating at Outperform with a $24 price target

Research evidence excerpt

AADX: Applying the right playbook; Initiating at Outperform with a $24 price target

Applied Aerospace & Defense Inc

Initiating at Outperform, $24 price target

Applied A&D is a merchant supplier of complex, mission-critical subsystems designed for extreme operating environments within defense and space

markets. Customers range from legacy defense primes to defense-tech disruptors and commercial space companies, with programmatic exposure to

Investment 150+ platforms. The Applied A&D portfolio was primarily formed through the combination of Applied Aerospace Structures Corporation (AASC) and

Thesis PCX Aerostructures (PCX), as well as the recent acquisition of Consolidated Boring Inc. (CBI). The company today has ~1,500 employees with ~1.5M

sq ft of production space across 11 facilities.

▪Exposure to fast-growing markets including missile & munitions, space, and UAS. We estimate space & launch, C5ISR, precision strike, and next-

gen defense aviation platforms account for ~50% of AADX’s PF2026E revenues, with the remaining ~50% from current-gen defense rotorcraft and

fixed-wing aircraft. We believe the overall portfolio is well-aligned across defense priorities, with <5% of revenues from sunsetting programs.

▪High revenue visibility supported by backlog and LTAs. AADX ended 1Q26 with a total contract backlog of $1,060M (inclusive of CBI) and a

~$3.8B weighted pipeline (~half of which is supported by LTAs). The backlog supports virtually all of our estimated 2026 revenues and a

Key Investment significant portion of 2027, and the combined backlog and LTAs provide visibility into ~75% of 2027E revenues and ~57% of 2028E revenues.

Points

▪Strong competitive positioning with minimal direct competition. We believe the majority of competition AADX faces is customers’ make vs buy