Arasal: How Dependent Is the New Growth Leg on U.S. Programs?
The main article showed backlog rebuilding. This follow-up shows that the new growth leg is leaning mainly on the U.S. Air Force and on a U.S. customer group that includes Lockheed Martin and others, so the real issue is not just demand but how broad that demand base really is.
Why This Follow-Up Matters Now
The main article showed that Arasal’s backlog had started to rebuild, but that earnings still rested almost entirely on control systems. This continuation isolates the next question: where is that new growth leg actually coming from? The answer is sharper than a quick read suggests. In 2025, almost half of sales came from two U.S. customer lines, one direct to the U.S. Air Force and one from a U.S. customer group that includes Lockheed Martin and others.
That matters because U.S. concentration can be read in two very different ways. The shallow read is that this is a quality stamp: American defense customers, recognizable platforms, and continued order flow after the balance sheet date. The more accurate read is that the company does sit deep inside a high-quality U.S. ecosystem, but that ecosystem is still fairly narrow. Much of the weight still comes from maintenance, upgrades, and test equipment for mature platforms, while the disclosed exposure to a new aircraft program is still small.
Two Customer Lines, One U.S. World
In 2025, direct sales to the U.S. Air Force reached NIS 13.6 million, or 33% of revenue. A second U.S. customer group, which the company describes as including Lockheed Martin and others, contributed another NIS 6.6 million, or 16% of revenue. Together that is NIS 20.2 million, equal to 49% of sales. In 2024, the same exposure stood at only NIS 11.1 million, or 20.5% of revenue.
That shift says two things at once. First, the center of gravity moved back to the U.S. after a year in which the Far East and HUMS pulled the picture elsewhere. Second, those two U.S. lines look more diversified on the table than they really are. One is direct procurement by the U.S. Air Force. The other sits around the F-16 manufacturer and follow-on orders under a framework arrangement, alongside other U.S. customers. On paper, that is not one customer line. Economically, it is much closer to one operating world.
| U.S. Exposure Axis | 2025 | What Sits Behind It |
|---|---|---|
| U.S. Air Force | NIS 13.6 million, 33% of sales | Direct relationship, including testing, repair, and upgrade work for J85 controllers |
| U.S. customer group that includes Lockheed and others | NIS 6.6 million, 16% of sales | Follow-on orders under a framework arrangement and exposure to the F-16 manufacturer plus other U.S. customers |
That reading is reinforced by the way the company works the U.S. market. It operates there through its subsidiary, and it also uses external advisers, retired U.S. military personnel, to understand customer policy and build ties with senior officials across the defense and government system. This is not opportunistic access. It is a built U.S. defense channel.
Why This Can Be High-Quality Concentration
The positive side of this concentration is that the U.S. revenue does not rest only on one-off product sales. In some cases, the end customer effectively dictates that specific parts in the aircraft specification be supplied by Arasal. In other cases, the company sits inside the maintenance and upgrade layer of existing platforms. This is concentration built on specification, qualification, and long lifecycle economics, not just on repeated bidding.
That is especially visible around the J85 engine and the U.S. Air Force T-38 trainer fleet. In early January 2026, the company reported a $1.2 million order for maintenance and upgrades of control systems for those engines, as the second-year option exercise under a $6 million, five-year framework agreement. In February, it added another roughly $517 thousand order from the same customer, and the company said it had already supplied more than 1,000 controllers for GE’s J85 engine and had been appointed as the prime tier for repair and upgrade of those controllers. This is not a one-off revenue line. It is a deep position inside an installed base.
There is similar quality in the F-16 axis. The company says it has a material agreement with a U.S. F-16 manufacturer to supply brake controllers for all F-16 aircraft produced by that manufacturer through the end of the aircraft’s life, roughly 20 years. That does not remove the risk embedded in concentration. But it does explain why the market tends to assign higher quality to that kind of revenue than to a casual contract or a single project.
In other words, this is not the concentration of a small company that got lucky with one customer. It is the concentration of a supplier sitting inside the maintenance and critical-systems layer of long-lived U.S. defense programs. That is why it looks better than the usual concentration profile of a niche company.
Where The Hidden Fragility Sits
The problem is that the market can confuse high-quality concentration with diversification. They are not the same thing. In the reported U.S. order flow from January 9 through March 24, 2026, disclosed order value reached about $2.37 million. But roughly $2.11 million of that still tied back to existing platforms: maintenance and upgrades for J85 units on the T-38, plus test equipment for the F-16 emergency power system. Only about $260 thousand related to Lockheed Martin’s first strategic order for brake-controller development on a new aircraft.
That is the core point. The new growth leg is indeed American, but at this stage it still rests mainly on maintenance, upgrades, and life-extension economics for mature platforms. The Lockheed Martin order matters strategically precisely because it breaks that pattern. The company says this is the first time it has been selected as part of the development of a brake controller for a new aircraft, and that the order includes milestones for characterization, aircraft-system integration, two prototypes, and ground-support test equipment. So there is the start of a move into an earlier stage of the value chain. But for now, it is still option value, not a new earnings base.
The hidden fragility becomes clearer when reading the company’s own forward language around the same axis. In the February report, the company said it expects another roughly $700 thousand order during 2026 under the J85 framework, plus a possible $2.8 million order for new J85 controllers for T-38 aircraft. If that happens, U.S. exposure deepens further. But even then, it will deepen mainly along the same existing thread rather than automatically broadening into a wider program set.
What This Means For 2026
The practical implication is that the market should not ask only whether the U.S. is a good customer. That is too easy a question. The right question is what type of U.S. revenue is now being built into the company. If most of the growth continues to come from maintenance, upgrades, and test equipment for existing platforms, Arasal will remain a company with high-quality but narrow U.S. exposure. That can still be a very good business. It is just not a genuinely diversified one.
For the reading of a new U.S. growth leg to become more convincing, two things need to happen in parallel. First, the company needs to keep converting the current order stream with the U.S. Air Force and F-16-related customers into revenue without margin slippage. Second, the Lockheed Martin entry needs to move beyond characterization work, milestones, and prototypes, and become a deeper commercial position inside a new program. Without that second step, the company may remain strong inside a few American niches without really escaping dependence on a small number of revenue threads.
Bottom Line
Arasal’s new growth leg does run through the U.S. That is a strength, because it signals a real position inside long-lived defense programs and an ability to win follow-on work rather than only opening orders. But it is also a hidden fragility, because that exposure is still highly concentrated around the same J85, T-38, and F-16 world, while the disclosed entry into a new aircraft program is still very small.
So the right read of Arasal’s U.S. concentration sits in the middle: it is higher quality than the usual concentration profile of a small niche supplier, but less diversified than names like the U.S. Air Force and Lockheed Martin might imply at first glance. The real 2026 test will not be whether more U.S. headlines arrive. It will be whether the company can turn that exposure into a broader program base, rather than just a deeper version of the same dependency.
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