Today on the call are Sean Nielsen, Cirrus CE- CEO, and George Letten, Cirrus CFO. Cirrus is providing a slide presentation to accompany their commentary in both English and Mandarin Chinese, and this conference call is also being webcast.

Please refer to your in- to our investor relations website at investor www.cirrusaircraft.com to find our full report and other filings. Some of the statements that we make today regarding our performance, operations, and outlook may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

In addition, our results, trends, and outlooks for 2026 H1 and beyond are not an assurance of future performance, and should not be used to extrapolate 2026 results. Cirrus is making these forward-looking statements based on information available to them as of today, and we expressly disclaim any duty or obligation to update them unless required by law.

For more information about risks, uncertainties, and other factors that could affect our results, please refer to our most announcement and upcoming interim results. Please submit your Q&A question during the earnings call via the chat box in text only.

When submitting, be sure to clearly state your institution and your name first. Now, I will turn the call over to Sean.

Thank you, Claire. Good morning or good evening depending where you are in the world today.

Thank you for joining our H1 2026 earnings call. As Claire mentioned, on the call with me here today, I have our CFO, George Letten.

Just like our last call, I will start out by giving you a brief business update, and call out some highlights along the way. Then I'm going to turn it over to George for a more detailed walk-through of the financials, and then I will pop back on at the end, and summarize and take questions with George.

Before I begin, I want to continue to offer a brief reminder about the nature of our industry. General aviation does not behave like traditional industrial markets, and Cirrus certainly in particular does not operate like other OEMs in this space.

To understand our overall performance, it's essential to focus on the true long-term drivers of demand, and rather than short-term indicators that can easily be misleading. For example, an order placed today with us is often delivered more than a year later, and product launches can create temporary spikes in near-term order demand, naturally normalizing over time.

It's easy to assume that quarterly market share reports from GAMA, or half-year results can be extrapolated to the full-year projections, that would be a mistake. GA is a long-term business with its own factors and cycles.

The key point here is quarterly fluctuations in orders, or margin, and so on, rarely reflect the long-term underlying trajectory of our business. Our long-term fundamentals are what matters, and those remain very, very strong, and has been very strong for the first half year this year.

Let me start with the bottom line upfront. HR started out— H- H1, sorry, started out very strong, as planned, across the board.

We carried a little bit more inventory through December into the new year by design in order to flatten the quarterly fluctuations. As a result, we delivered growth on nearly every metric we care about.

We did it while executing consistently on our six-pillar strategy. I once again wants to want to thank our team members for their outstanding work, their discipline, and their commitment to hard work and innovation that what makes results like these possible.

Likewise, I want to thank our shareholders and the board for their trust in us. The GAMA market share report for H1 is not out yet, but I am confident in saying that when it comes out, you will see that we continue to lead the industry.

The last report, which was Q1, we commanded about 52% market share for the piston market and about 28% for the SF50 market. I don't expect that to change when the report comes out later in September.

More importantly, we continue to do it the Cirrus way by focusing on long-term fundamentals, which are not always the easiest thing to do, but typically what is best for the customer, meaning we would likely have been able to deliver more airplanes over the last six months, but we want to scale the network of services and parts distribution and training centers in tandem with our production, so that our airplanes do not come out into the market and become orphans without a service network to greet them. We do that by continuing to invest heavily in capex and intangibles so that we can grow at a stable and predictable pace.

Each year, we advance the ball a little bit here and make personal aviation a little bit more simple, a little safer, and more accessible. G7+, G3, and now TRAC10 are all examples of that.

Because of this innovation, our book-to-bill ratio is now nearly back to one to one. I think it sits around 0.98 to one, despite the fact that we continue to increase our production footprint and output every year.

Throughout H1, we executed extremely well against our 10-year business plan and six strategic choices, which I will go into later on in this presentation. Financially, this all resulted in that our revenue grew from $594 million to $737 million, representing a increase of 24%.

Revenue from Cirrus Services grew 25% from $96 million to $120 million, primarily driven by growth in pre-owned sales, JetStream, which is our subscription service or warranty for the jet, and aftermarket parts. Total gross profit increased 24% from $215 million to $267 million, primarily attributable to increased volume, aircraft volume, strong pricing, and mix, and increased revenue generated from Cirrus Services.

Adjusted EBITDA increased 33% from $102 million to $136 million. Adjusted profit or net income increased 35% from $65 million to $88 million.

Orders and reservations increased by 157 units from 241 to 398 during the same period last year. Operating profit was also up by 0.8% from 14.1 to 14.9, which I believe, the last time I checked, is among the best in the industry.

Lastly, we generated healthy free cash flows of nearly $75 million. These results are not accidental.

They are the outcome of a very deliberate strategy over the last seven years. We call it our six-pillar strategy.

We've covered this strategy in the past calls, but it's important to keep in mind or keep that in the back of your mind because this is what we live and breathe every single day. These pillars guide every investment decision we make and every initiative that we prioritize.

In short, we tell our teams every single day that if you're not working on one of these six high-level initiatives, then you're working on the wrong things. Let me give you some brief examples.

Superior supply chain is the first one, meaning turning supply chain performance into a truly competitive advantage is super important for us. Stability means profitability.

You need certainty of supply and having a smooth running production line at all times for a company our size, but it's often forgotten from a strategic perspective because it's not all that exciting to talk about. However, we have been quietly grinding away at this for years now.

Today, more than 90% of our suppliers are on what we call LTAs, or long-term contracts with us, which both improves the quality and the price, and, of course, the innovation. Set in a different way, we act like partners versus simply having a buyer and seller relationship.

This approach was especially helpful during COVID when the world got turned upside down, and continues to be very fruitful for us. The second pillar is all about rapidly building out the ecosystem so that it's easy to find a place to train, and later to buy the airplane, specifically securing financing and insurance for it, as well as finding a place to hangar it, and someone to maintain it for you.

As we build out that physical infrastructure, we're also building out a digital back prone— backbone that we call Cirrus IQ. That will, of course, in time, enable us to offer an even more seamless customer experience and additional services.

A notable mention here is the launch of our Cirrus Next program, which allows our customers to trade in their Cirrus when they want to trade up for a new one. Think certified pre-owned if if you think of the automotive industry.

In essence, we take their old plane in trade, they don't have to have the hassle of selling their old one on their own on the use market. Set differently, you don't have to have two mortgages at the same time.

Simply keep flying your current airplane all the ways till the delivery of your new airplane, and then we simply swap the keys. The third pillar, expanding our flight training solutions, is all about three things.

Number one, get more people into aviation by creating a better learning experience. Number two, improve and strengthen safety by using standardized training material that is tailored to flying a Cirrus.

The problem with most training in general aviation today is that it teaches you how to fly, but it isn't specific to your own personal airplane, you don't become an expert in your own airplane along the way. If you train with us, we will use our syllabus, our airplane, and our training community, making you a much safer and capable pilot.

Number three, this community around the world creates an even bigger funnel because they act as an extended sales and marketing team for us, bringing lots of new customers into the fold. To put it in perspective, our network of authorized CSIPs, which is short for Cirrus Standardized Instructor Pilots, now span worldwide to more than 426 locations.

These partners and locations combined manage over 850 TCIs, which is short for Training Center Instructors, essentially casting a net over every major market in the world. The fourth pillar that we focus on is innovation and product expansion.

As we recently launched G7+, G3, and here in July, we introduced the TRAC10, which is a purpose-built training airplane. The SR2X and the SF50 platform both continue to dominate their categories because they keep getting better and better every year.

We expect the SR10 to do the same when we start deliveries at the end of Q1 2027. As you may recall from previous earnings calls, we invest upwards of about $100 million in capex and intangibles every single year to make sure that we are leading in both development, design, and production of airplanes, while at the same time lowering the cost of ownership where possible for our customers.

The goal here, of course, is to reduce the barrier of entry. Our focus is heavily on safety through automation and autonomous capabilities, as well as a great service experience.

Introducing Safe Return on the SR G7+ line is is an example of that. Making an airplane choose an airplane and land itself fully autonomous in case of a pilot incapacitation is no small feat, especially in small, inexpensive airplanes like ours.

Moving over to the fifth column, which is about expanding our export markets, our product portfolio over time is expanding and will continue to expand. As we do that, we can selectively participate in more markets, both domestically and internationally, both in terms of reach, but also in terms of categories.

We don't break up our revenue in terms of markets, but we are starting to see a nice impact in both Canada, Brazil, and Europe as we invest in those markets. More to come on that at our full-year earning call.

The sixth and last pillar is about Cirrus on Demand. It's really all about the easy button.

Not a pilot, not a problem, as we like to say. The more we can simplify flying, the and the ownership experience, the better.

There are millions of people that both have the financial means and the travel needs to own their own airplane, but they simply don't because they don't know that it's ultimately easier and cheaper than going commercial. The general public does not know that operating a Cirrus for an hour will cost you roughly $300 per hour, and you can fit four to five people on board.

That's far less than an economy ticket for one person. With us, you can fit five.

If you break that down per seat, it's actually really, really cheap. Those numbers are, of course, if you fly the airplane yourself.

What if you're not a pilot? That is not a problem.

We can fly your airplane for you. We offer what we call Cirrus One in a handful of locations.

This is something that we, over time, will see gradually expand to more locations throughout the country as we work our way through the learning curve. Of course, I can talk about our strategy for hours, but I'll move on and hand it over to George in a minute.

Before I do that, I want to show you the G3, TRAC10, and also a little bit about our ecosystem, how it continues to expand. As I mentioned, in February 2026, we launched the third generation of our Vision Jet, which introduced a reimagined interior with expanded seating options for up to six adults.

We also introduced what we call CPDLC, or ATC Data Link, and over 30 additional refinements, such as increased legroom, integrated tray tables, device mounts for your iPad and your iPhone, automatic database updates, special alerts linked to checklists to increase safety and maximize productivity for the pilot, and so on. The G3 has given current jet customers yet another reason to trade in and trade up, and new customers a reason to get into the brand.

These updates just makes the airplane great for that retail— or, sorry, it doesn't just make it great for the retail customer, it also makes it great and more attractive for small 135 charter operators to buy in the Vision Jet for their fleets. Moving on to the entry-level part of the market, we announced TRAC10 in July right before Oshkosh, and have been quietly taking orders and pre-orders for it for a little while.

As of today, we have already taken over 140 orders for it, and shippings, as I mentioned, will begin late Q1, early Q2 next year. It's our belief that there is nothing like the TRAC10 on the market today, meaning a new, clean-sheet, entry-level trainer purpose-built for professional flight training organizations.

Its features and handlings are tailored to training, and it pairs dependable performance with very low acquisition cost, a rich, standard set of features, and an optimized interior, meaning with a second set of avionics in the back for dual instruction. That means that you can train two students at the same time, thereby lowering the overall cost for the students and increasing the capacity for the instructor.

Furthermore, it has a brand new, modern Rotax FADEC engine, air conditioning, a parachute, Cirrus IQ app, full training syllabus, and and the amazing part is that it's priced below well-established trainers on the market today, which do not have any of those features that I just mentioned. I won't dwell too much today on the SR2X line, other than say that we launched the G7+, which now, as incorporates Emergency Autoland, which we like to call Safe Return, and that is a standard safety feature.

All three of these updates have had a very favorable impact on our order rate. If we continue to move on here, you'll notice that we continue to deploy the IPO proceeds towards three priorities that we outlined in the prospectus, namely capacity expansion, innovation and product development, and building out our service network.

Some noticeable updates here is that we just opened our 30,000 sq ft expansion in Grand Forks, as well as our Cirrus Talent Center in Duluth, where we train our now 3,000 employees, as well as the partner network. We also continue to expand our Cirrus Next trade-in program in Knoxville, as well as our training footprint in Arizona with more SIM capacity.

Speaking of services, and before I turn it over to George, I just want to make sure that investors understand that not all revenue streams are created equal, meaning the margin percentage, the cost, and the time to stand them up, the top and the bottom-line impact differ materially. For instance, certified pre-owned will have a big revenue impact, but carry a very low profit margin.

The goal here isn't profit. The goal is the customer experience and lubricating the sale of a new airplane to happen.

We only take in a trade if you buy a new airplane at the same time. On the more profitable side of things, you have services like brokering and referral fees for insurance and financing, and so forth.

Both are small in terms of revenue, but highly healthy in terms of margin because it requires very little overhead to run. Our goal with these services is long-term stickiness of our brand and customer loyalty.

We want to make the ownership experience very, very easy. To do that, we have to provide all the services a customer normally would have to piece together and figure out for themselves.

Setting that up, becoming good at it, will take some time. In addition, when you introduce new products at the pace we do, such as the TRAC10 into your production line, the first units tend to cost you money until you learn how to build them in a high quality and at a high rate.

By way of example, the SR10 already has a very low ASP, which means that the margin dollars are limited to start with, you have to battle both the learning curve and amortizing the program and production tools the first couple of years. We don't want you to try and outsmart the system, to speak, you should think of us as being on plan if we stay inside these very basic ranges every year.

Some years will be at the top end and others at the low end, but that's all intentional, and it's very much planned. We work very hard at balancing all of these key performance indicators so that we have a stable year-over-year net income, which is really what anyone should care about.

We like to say that we take revenue— we don't take revenue to the bank, we take profit to the bank. I'll leave you with this: Cirrus is truly stronger than ever.

Our balance sheet is as strong as it's ever been. We are nearly debt-free.

Our backlog is healthy, depending on make and model, and you have to wait anywhere from one to two years to take delivery, which keeps the used market very healthy, too. Our book-to-bill is almost one to one.

Our goal over time, as is to calibrate it to about one-year wait so customers can get their aircraft sooner. We have deliberately built up production to get the backlog down for that very reason.

We're well-positioned, well-capitalized, and very energized to keep executing on our six-pillar strategy, just like we have for the last seven years. All right, I'll pause here and turn it over to George, and then come back at the end.

Thank you, Sean. It definitely was an exciting first half, and I join you in congratulating the team and delivering these very strong first-half results.

As Sean discussed, we saw many changes and continued focusing on investing in the business in the ways we dealed— we detailed when we became public. The product went through some significant innovations here in the first half with both product lines having new introductions.

The first, the launch of a Generation 3 of our Vision Jet product, which Sean described all of the new features and value that brings to our customers. Secondly, the introduction of the TRAC10 in July that also included much sales activity tied to this launch.

As Sean mentioned, these were both critical steps that are focused on the entry level of training, which drive some margin pressure, not to mention the continued targeted expansion within our manufacturing. Now let me bring you through a few of the key figures from our first-half results.

As always, we'll start by focusing on the front end of the business, the demand profile, by looking at orders. These new launches both had a significant impact on our order rate, especially compared to this time last year.

This is another example of where you should not extrapolate a half-year to a full to a full year, especially since our orders include the TRAC10 sales figures upon launch. You can see we had almost 400 orders over the first half of the year, moving from 241 a year ago to 398 for the first half of 2026.

This puts us on a nice pace to continue to drive a strong order rate for the full year. This also demonstrates that we continue to not be demand challenged, rather we are capacity constrained.

Next page. As we look at how our deliveries have developed, in the first half of 2026, we delivered 16% more, going from 350 deliveries in 2025 to 400 deliveries, 405 deliveries in the first half of 2026.

Our delivery mix within the first half contains a lot of noise, which resulted in a heavier mix this first half of the year of our premium products, as demonstrated by the GAMA numbers that have come out. Really, this first half of 2026 contained a much richer mix of 22Ts and 22s over the 20, and also a larger growth of the Vision Jet product as compared to our total delivery number.

We do expect the second half of the year for the mix of products to normalize to our traditional mixed profile, and this will have a negative impact on our overall margin profile. Finally, as we move into the second half, we will see minor manufacturing noise as we gear up for initial production of the TRAC10 with deliveries scheduled to start in 2027.

Both previous pages really come to life when you look at one of the more critical numbers for OEM, which is the book-to-bill ratio. In the first half of 2026, we had a book-to-bill of nearly one, at 0.98, which means we really had as many orders as units delivered to end customers, keeping our overall backlog very strong as we continue to increase our production capacity.

You can see both from the yearly numbers at the bottom and the current half-year comparison, we have built a very strong and stable business. Even though we continue to expand the manufacturing capacity and efficiency, as shown by our increased deliveries, we have seen the demand profile keep pace.

Now let's dive into some of those financial numbers. First, as we look at the top line of the business, our revenue profile.

We can flip the slide. Our revenue increased from slightly under $600 million last year to almost $737 million for the first half of this year.

When you look at the revenue, we remember the first half had a much richer mix of our 22 portions of the SR line and Vision Jets as compared to the previous year. Even with this said, we continue to drive nice revenue growth, with revenue increasing 24% year-over-year, with both portions of the business growing in tandem over the first half.

This demonstrates the strength of our strategy of diversifying through the value chain and expanding our reach to customers with the continued growth of our ecosystem and those and the ecosystem offerings. Now let's see how all of that transcended into the gross profit.

As we turn our attention to gross profit, the first half of 2026 grew 24% from the same period of 2025. Gross profit moved from just over $215 million in 2025 to just over $267 million in 2026.

This also led to a very stable gross margin margin year-over-year with just a slight increase in the overall percentage. However, as Sean mentioned, you should focus on the performance bands, which will demonstrate we are creating a very predictable and stable business.

This gross profit margin of 36% fits nicely within those bands. Now let's look at the operating profit of the company.

Our overall operating profit increased in the first half of 2026, really driven by this increase in product mix we have discussed. In the first half of this year, operating profit increased 31% year-over-year, going from a little more than $84 million in 2025 to over $109 million in 2026.

This continues to show that our ability to drive efficiency within the operations of the business, but due to mix being stronger, this first half is stronger than normal. Remember, we do expect the second half of 2026 to normalize as we get ready to produce the TRAC10 in 2027, see the mix shift return back to normal levels, and we continue to see the growth of our operating expenses as we continue to drive demand generation.

Now let's turn our attention to cash. This year, we've introduced a new metric for cash, which is free cash flow.

You can see here the first half of the year was very strong for free cash flow, but a little distorted with some of the timing of our investing activities. Our free cash flow for the first half of 2026 was positive, compared to a usage of cash in the first half of 2027.

This is largely driven by the timing of our investments back into the business, some pronounced benefits in working capital, and other strong operational metrics of the business. We do expect in the second half of the year for our cash flow to normalize as as these impacts become less pronounced.

Now let me turn it back over to Sean so he can highlight some of the first-half results.

Thank you, George. Before we summarize and go to Q&A, I just want to repeat a message we gave previously.

Cirrus is not like any traditional OEM that has peers in the market, you'll be hard pressed to find anything like us if you're trying to benchmark us. Unlike other OEMs who sell B2B, or via a network of dealers, Cirrus has a direct-to-consumer approach.

This means that we have an obsession-like focus on the customer experience. We're not a company of rules, but we are a company of standards.

Every year, we challenge ourselves to do better in every area of airplane design, and ownership services, and support, with a single goal of making it safer, easier, and more affordable to own a Cirrus. We really want making flying and owning a Cirrus as simple as owning and driving a car, something that everybody can do and everybody has tried.

This philosophy not only makes us three times safer than anything else in the industry, it also makes us sticky. We have many customers who have purchased four and five airplanes from us over the years, and this approach allows us to play long ball.

We focus on where the value is both now, but also where it's going to be 5 and 10 years from now. An airplane that feels like a car, brings 5 to 7 people somewhere around 3 to 700 miles, that can land itself is cool now, and it's going to be cool 10 years from now.

Secondly, we're not like other OEMs in the industry either. We're more than an aircraft company.

We're a combination of a technology company and a lifestyle company that happens to sell the most valuable asset of all, which is time, in the form of transportation, with an ecosystem that is both sticky and keeps customers coming back for more products as well as subscription-like services such as JetStream and Cirrus IQ. All this to say, we continue to grow Cirrus not only in the volume of products that we provide, but also the type of services we offer, not just here in the US, but all over the world.

Lastly, we have a very clear six-pillar strategy that stretches 10 years out that we are carefully executing, and those six strategies or strategic choices are the real drivers of our current and future success. In addition, of course, to our fantastic team here at Cirrus.

I'm going to pause here and go to Q&A.

Thank you, Sean and George, for the excellent presentations. We now move to the Q&A session.

Please note that this session will be conducted via text only. Please type your questions in the Q&A box.

When submitting, be sure to clearly state your institution and your name. Simultaneous interpretation between Chinese and English will be provided throughout.

Now please enter your institution name and question in the Q&A box. Thank you for your cooperation.

We look forward to your thoughtful questions.

[Foreign Language]

Now we have the first questions from [Foreign Language] The question one is: H1 aircraft production grew only 1% with SR2X production up to 7.8%. Following the Grand Forks expansion, what production growth and annual capacity do you expect for H2 2026 and 2027?

The second question is: despite higher Vision Jet mix, higher ASPs and 15.7% delivery growth, gross margin remained flat at 36.2%. What offset that benefit, and is Vision Jet's gross margin higher than SR2X?

This is a question from Mr. Cai, an individual investor.

Thank you. I noticed there's an additional question in the in the queue prior to this one, let me just read that one out out loud and and George can take the second question here.

The first question was: what is the earnings guidance for the year? Let me just answer that really quickly.

Forward-looking guidance in my presentation, I covered essentially how you should think about the business year-over-year on a continuous basis, and revenue growth is is at a pace where year-over-year from now and in the future, we want revenue to grow somewhere between 8% to 12%. I can refer back to, that that page in the in the presentation, but that's essentially the the way we want to structure the business, we have stable year-over-year growth.

We're not looking for this this sort of hockey-stick growth where we just pump out airplanes, because that would mean that they come out into a marketplace that is not ready to receive them from a service perspective, from an AOG perspective, parts availability, training centers, and so forth. We are looking for the type of growth we've seen the last 5 years on average to continue.

That was the answer to the first question. George, you want to take the next one?

Sure. The, the the question about Grand Forks expansion and and our overall production level, this really builds off of what Sean was just mentioning with the revenue growth.

Remember, when we went public, we talked a lot about how our market is expanding, roughly 8% a year from total customer basis, and our goal was to grow with that market and to continue to take shares. The growth you saw in the first half was well in line with that expectation.

Grand Forks expansion of the 30,000 sq ft really allows us to remove some of the bottlenecks we have in some of the composite parts that are made in Grand Forks, as well as also allows us to drive some efficiency in the workforce due to being able to streamline the production flow. Grand Forks itself will not be a massive expansion to overall aircraft output, but it does allow us to be able to remove some of those critical bottlenecks.

When you look at the second question that Claire read related to the Vision Jet mix and the higher ASP, 15.7% delivery growth is is a very strong growth in that period of time. We do, as we've always talked about and and continue to manage the business and the mix that we see of products, to continue to drive kind of those stable gross profits.

That's really what you saw here in in this first half, very strong revenue growth performance, very strong delivery growth performance, and us balancing out the business in the different metrics to continue to drive that stable gross profits.

[Foreign Language]

Thank you. The next questions is from Haitong International, from Oliver Meng.

The question is: great performance team, and my question is, the ASP, product mix of the shipment in '26 H1, and would you mind to divide into the order details and the backlog in '26 H1?

Let me start out here, and George, you can chime in. Our ASP has been, pretty pretty stable year-over-year.

Obviously, the total ASP is going to be impacted by the the SR10, which will retail for roughly $500,000. Once that enters the mix, the the total ASP is going to obviously be impacted by it.

The ASP for the both the Jet and the SR are stable and, increasing slightly every every year, partly because we pass on inflationary costs to customers when when when we can, plus we increase price a little bit when we add value to the airplanes. For instance, when we added the G7+, the Safe Return feature, we we added price to account for that R&D cost, and so forth, and the value, of course.

In terms of the backlog, we don't break that down in any great level of detail aside from saying we have more than 1,000 airplanes in the backlog across all the portfolios. That is pretty stable.

As I mentioned, our book-to-bill ratio is almost one to one. As long as that's the case, that backlog stays intact.

Anything you want to add to that, George, or should we go to the next question?

No, I think that is sufficient.

Okay. Next question.

[Foreign Language] Okay.

Thank you. The next question is from China Merchants Bank, from Liu Hongwei.

The question is: what is the earning guidance for this year?

I already answered that question previously by giving the essentially the guidance on the the the seven key performance indicators previously, by giving revenue, non-aircraft, gross margin, opex, operating margin, net income, and book-to-bill. As long as you use those year after year after year after year, you'll be fine.

There was a question from a US investor. George, you want to take that?

Sure. It looks like David Dwyer from Bloomberg had asked the difference between a delivered and a produced aircraft and is it just a timing thing?

Definitely just a timing thing. If you think of our production cycle, essentially every plane is born in Grand Forks with the composite parts, then comes over to Duluth where it takes about 60 days or so for the SR to be produced, about 90 days for the SF to be produced.

From there, it'll go down to Knoxville for delivery. That time it finishes and gets certified off the line in Duluth to when it meets that final delivery is really that is that timing item for produced and delivered aircraft.

[Foreign Language]

Thank you. We will have the next question from Zheshang Securities.

The question is about, the first is: how much impact did the raising raw material cost have on the company's overall cost structure in H1 2026? The second is about: what are the plans and pace for future client expansion regarding TRAC10, as well as the capacity allocation plan?

Thank you.

[Foreign Language]

Sure. The the raw materials and definitely the inflationary period we have been going through has had an impact on all of the supply base out there.

Our team has done a tremendous job in managing that, as Sean talked about earlier as we went through our strategic pillars. That first one of superior supply chain and really being a partner with our supply bases has really helped us manage that very well.

In addition, we have the majority of our suppliers on long-term agreements. We definitely have seen a little bit of cost pressure, but the team has been able to manage it extremely well.

I think the consistency you've seen in our profit profile has been a a great illustration of that. When we think of the TRAC10, remember that is an aircraft that is geared for that training market and the introduction market.

Those orders will really kind of be in the same vein as some of the SR20 orders we've seen. I I would refer back to our historical GAMA mix of roughly 20% being in that SR20 or the training market, 30% being the SR22, and 50% being the SR22T.

That has been a pretty steady historical mix factor, and the TRAC10 will just play in that space with the SR20.

[Foreign Language]

All right. I think we have time for one, maybe two more questions here.

Looking at the the list, let me pick one from Dongwu Securities. The question is about the TRAC10, where will it be produced?

On the same line as the as the SR, or a dedicated capacity? The answer to that is both.

There are certain stations in the production line where the two lines essentially meet and share capacity, that is areas like paint, the final flight line where we do production test flights and those sorts of things. In the beginning, as we learn how to build this airplane in a high quality and at a high rate, we're running it sort of on a pseudo-separate line, and then it merges with the main line from time to time.

We're very focused on doing it at the right pace, because if we do it at the wrong pace, it will impact the overall gross margin and and net income of the company. We're going to feather it in so that we keep our net income growth balanced year-over-year.

That's how you should think about the SR10, and the entire mix, right? We balance the backlog, as I mentioned, of of almost 1,000, or a little bit more than 1,000 airplanes to make sure that we have a balanced gross margin and a balanced net income year-over-year.

I wouldn't worry too much about how we manage that. We we manage it to to an outcome because we have that backlog, and we can we can sort of predict it that way.

[Foreign Language]

Shall we have— Yep,

I will take one final question. Oh yeah.

Yeah.

Probably time for one more question. I see CICC and Ying Ying asked a question here about the newly added production capacity at Grand Forks, and will that be towards the Vision Jet?

Then also related to the guidance for services and other revenue over the next few years. The way I would definitely think of the Grand Forks expansion is helping us alleviate bottlenecks throughout the production cycle.

Grand Forks does make plants for, or parts, sorry, for both our SR2X line, as well as the Vision Jet, and also they'll be making parts for the SR10. As you can imagine, having all of those molds and different lay-up requirements out there, this extra space allows them to have that diversification in parts.

This capacity expansion will help across the product line. As you think of the services revenue over the next few years, this is a great place for that darts that Sean really laid out, and thinking of the bands.

One of those in there is, currently our services revenue is 15%, 16% of the total revenue. Our goal is to continue to diversify the business as we continue to expand this ecosystem, and be targeting moving towards, 20% to 25% of the total revenue being in there.

We continue to to see the mix of the product and that ecosystem change, and so you'll see some spikes or lulls in it if pre-owned picks up in one case or the FSE goes down in another. Us continuing to see that trend is the very important one, and and we continue to try to make sure that we have this good diversification and the stickiness that Sean talked about earlier with the customer.

The reason why we have all those different product offerings within the ecosystem element, making it easier for our customers to own an aircraft and participate in the value they get from personal aviation.

[Foreign Language]

Thank you all. This concludes today's Q&A session.

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