Arxis Raises 2026 Guidance After Q3 Revenue Jumps 36%

Arxis Inc. (ARXS) increased its full-year 2026 revenue and adjusted EBITDA guidance after third-quarter sales rose 36% and profitability expanded sharply, supported by organic growth, acquisitions, pricing and operating improvements. The engineered-components supplier also introduced a 2027 outlook calling for double-digit reported growth in revenue and adjusted EBITDA.

For the three months ended September 30, 2026, revenue reached $564.0 million, up from $414.8 million a year earlier. Organic growth accounted for 29 percentage points of the increase, while acquisitions contributed 7 points. Arxis reported double-digit growth across its defense and space, commercial aerospace and business jet, and industrial technology end markets.

GAAP net income was $83.7 million, compared with a net loss of $10.1 million in the prior-year quarter. Adjusted EBITDA increased 67% to $255.9 million from $153.5 million, while adjusted EBITDA margin widened to 45.4% from 37.0%. The company attributed the profitability gains to operating leverage, favorable pricing and continued operational improvements. Incremental adjusted EBITDA conversion was 69%.

Free cash flow, defined as operating cash flow less capital expenditures, more than doubled to $149.6 million from $68.8 million. Operating cash flow was $169.1 million, while capital expenditures totaled $19.5 million.

2026 guidance increased

Arxis now expects full-year 2026 revenue of $2.05 billion to $2.07 billion, up $90 million at the midpoint from its previous range of $1.96 billion to $1.98 billion. The new forecast represents reported growth of approximately 29% to 30% and organic growth of about 21% to 22%. The company said acquisitions completed after its second-quarter earnings release account for $60 million of the increase.

Adjusted EBITDA is projected at $855 million to $865 million, compared with the prior range of $790 million to $800 million. That implies reported growth of approximately 50% to 51% and an adjusted EBITDA margin of about 41.7%, 130 basis points above the margin in the previous guidance. Recently completed acquisitions contribute $20 million of the guidance increase and are expected to dilute the 2026 margin by 30 to 40 basis points.

By end market, management assumes roughly 20% organic growth in defense and space during 2026. Commercial aerospace and business jet, as well as industrial technology, are each expected to post organic growth in the low- to mid-20% range. Those businesses represented 47%, 23% and 30%, respectively, of 2025 revenue.

Initial 2027 outlook

For 2027, Arxis expects revenue of $2.4 billion to $2.5 billion, representing reported growth of approximately 17% to 21% from the midpoint of its latest 2026 guidance. Organic revenue growth is projected at about 10% to 15%.

Adjusted EBITDA is forecast at $1.01 billion to $1.06 billion, implying reported growth of approximately 17% to 23%. The company expects an adjusted EBITDA margin of 42.1% to 42.4%, including 20 to 30 basis points of dilution from acquisitions completed in 2026. Arxis did not provide GAAP reconciliations for its forward-looking adjusted EBITDA measures because management said the necessary components could not be reliably predicted without unreasonable effort or expense.

Management said growth is being supported by higher production rates on programs including Patriot, F-35 and 737, along with industrial platforms, recently won content and acquisitions. The company’s illustrative revenue model was not presented as actual revenue or formal guidance.

Balance sheet and acquisition capacity

Arxis continued to pursue acquisitions in partnership with Arcline, completing several mechanical- and electronic-components transactions during 2026. The presentation identified Omnetics, Schatz and StratEdge as acquisitions completed after the company’s July 29 second-quarter earnings release.

The company ended the quarter with $1.1 billion of available liquidity, including $493.7 million of cash, $396 million of undrawn revolver capacity and $201 million available under a delayed-draw term loan. Net leverage declined to 1.6 times trailing adjusted EBITDA from 4.2 times at the end of 2025, following the repayment of a $946 million term loan in April using a portion of initial public offering proceeds.

Arxis said its outlook remains subject to risks including its concentration in aerospace and defense, exposure to U.S. government contractors, competition, cost overruns, component and raw-material availability, inflation, indebtedness, regulatory requirements and the integration and execution of acquisitions. Product performance, liability claims and the company’s ability to protect intellectual property could also affect results.