Jordan Lyonnais

Jordan Lyonnais asked if TransDigm has a target for how much its PMA business should grow or what percentage of the portfolio it would be comfortable with, looking out three years after the Jet and Victor acquisitions.

Answer

CEO Mike Lisman explained that TransDigm does not set a specific total percentage growth target for its PMA business within the overall commercial aftermarket. The acquisitions were modeled based on a five-year LBO model, targeting a 20% IRR, driven by good volume growth. He noted that PMA is a small but growing subsector expected to grow slightly above the market.

Jordan Lyonnais asked about the adjacencies and opportunities Crane Company is considering for the newly renamed Aero and Advanced Technologies (AAT) segment, specifically mentioning IGT or aero derivatives. He also inquired if the opportunity for Collaborative Combat Aircraft (CCAs) has changed with Tranche 2 bringing in new contractors.

Answer

Alex Alcala (SVP and COO, incoming CEO) stated that Crane Company is exploring many different adjacencies beyond traditional fluid power control in aerospace, including land-based applications and other high-growth markets that complement military and aerospace technologies. Regarding CCAs, he confirmed that Crane Company is well-positioned with both traditional primes and new entrants, having won positions in demonstrator programs like Fury, and feels bullish about benefiting from this segment.

Jordan Lyonnais (Bank of America) inquired about potential adjacencies for the newly renamed Aerospace and Advanced Technologies (AAT) segment, specifically regarding opportunities in IGT (Industrial Gas Turbines) or aeroderivatives. He also asked if the company's outlook on Collaborative Combat Aircraft (CCAs) has changed following the Tranche 2 down-select.

Answer

Alex Alcala (EVP and COO, Crane Company) stated that AAT is exploring various adjacencies beyond traditional fluid power control, including land-based applications and other high-growth markets that complement military and aerospace technologies, without naming specific areas like IGT. For CCAs, he affirmed that Crane remains very well-positioned with both traditional primes and new entrants, having secured content in demonstrator programs like Fury, and is bullish on the segment.

Jordan Lyonnais asked about Crane's current capacity to meet the strong demand and book-to-bill ratios observed in the Aerospace & Electronics segment.

Answer

Alex Alcala, Executive Vice President and Chief Operating Officer, expressed high confidence in Crane's capacity to meet demand and the ramp-up rates of OEMs like Airbus and Boeing. He highlighted the teams' effective preparation, including inventory buffers, to support these ramp rates at a high level.

Jordan J Lyonnais inquired about Crane Company's opportunities in defense and aerospace, specifically regarding potential announcements for FXX, CCA down-selects, and larger group four and five drones. He also asked about the company's current capacity to meet the strong demand and book-to-bill in Aerospace & Electronics.

Answer

Alex Alcala, EVP and COO, confirmed Crane is well-positioned on NGAD demonstrators, has secured a position with a leading emerging player in CCA, and actively participates in medium to larger drones (like Fury, Global Hawk, Predator) with various solutions, expecting continued market growth. He also stated that Crane is well-prepared to meet demand and OEM ramp-up rates for both Airbus and Boeing in Aerospace & Electronics, with teams having prepared inventory buffers to ensure high-level execution.

Jordan Lyonnais questioned the anticipated impact of recent R&D tax changes on the company and asked why Crane is confident it can add value to the newly acquired DRUK business from the PSI transaction.

Answer

EVP & CFO Rich Maue projected a modest free cash flow improvement of less than 5% from the tax changes. EVP & COO Alejandro Alcala expressed high confidence in improving the PSI businesses, citing their strong technology and aftermarket. He outlined plans to leverage the Crane Business System (CBS) to drive operational improvements and achieve a 10% ROIC, similar to past successful integrations.

Jordan Lyonnais of Bank of America questioned the key drivers for 2025 margins, specifically the mix of pricing versus volume, and asked about concerns regarding Crane's China exposure in the PFT segment given potential U.S. tariffs and Chinese retaliation.

Answer

EVP and CFO Rich Maue stated that the 2025 margin guidance reflects a healthy leverage rate, with pricing expected to more than offset inflation, supplemented by ongoing value-pricing initiatives. Chairman, President and CEO Max Mitchell expressed 'very little concern' about China exposure, citing the company's low material content from China, effective supply chain management, and preparedness to handle any new trade measures without overreacting.

Jordan Lyonnais asked about the enduring nature of domestic demand following the ceasefire and the potential trade-off with margins if domestic bookings slow and the company skews more towards international business.

Answer

CFO Kobi Kagan explained that the company saw a $1.4 billion increase in backlog this quarter, with $200 million from Israel and $1.2 billion from outside Israel. He indicated a target of flattish backlog in Israel and growth predominantly in Europe, which is seen as the primary future growth area for backlog.

Jordan Lyonnais asked about the expected endurance of domestic demand following the ceasefire and the potential trade-off with margins if domestic bookings slow and the company skews more towards international business.

Answer

CFO Kobi Kagan explained that the company anticipates a flattish domestic backlog in Israel, with future growth predominantly driven by international orders, particularly from Europe, as evidenced by the current quarter's backlog increase.

Jordan Lyonnais of Bank of America inquired about the key drivers for margin expansion in the second half of 2025 and requested an update on the IronBeam program, including the supply chain for solid rocket motors (SRMs).

Answer

Executive VP & CFO Yaacov Kagan stated that margin expansion efforts are ongoing, driven by the new ERP system, operational leverage, and other initiatives that have improved margins over the last three years. President & CEO Bezhalel Machlis added that for the IronBeam program, which is led by Rafael, Elbit is developing and starting to deliver the high-power laser source, with system deployment expected by year-end. He also noted parallel development of airborne laser solutions.

Jordan Lyonnais of Bank of America inquired about the key drivers for margin expansion in the second half of the year and sought an update on the IronBeam high-power laser program and its related supply chain.

Answer

Executive VP & CFO Yaacov Kagan stated that margin expansion efforts are focused on the new ERP system and operational leverage. Regarding IronBeam, Kagan and President & CEO Bezhalel Machlis clarified that Elbit supplies the high-power laser source for the Rafael-led system, with initial deliveries starting soon and deployment expected by the end of the year.

Jordan Lyonnais from Bank of America asked about the strong defense product revenue in the quarter, inquiring how much of that strength is expected to continue throughout the rest of the year. He also questioned CAE's strategy for margin growth in the defense business, particularly regarding protection against fixed-price contracts going awry, given recent comments about reducing cost-plus contracts.

Answer

Matthew Bromberg, President and CEO of CAE, highlighted CAE's unique capability as a commercially organized entity with a defense business, allowing it to pursue both fixed-price and cost-type development contracts with execution ability. He emphasized CAE's nimbleness and flexibility in the market. Constantino Malatesta, Interim CFO, explained that the higher proportion of defense product revenue is driven by new and recently signed contracts ramping up, such as the Canadian FACT contract (initially product-heavy, then sustainment) and other U.S. contracts.

Jordan Lyonnais asked about the future margin mix given Axon's extensive investments in new product development and acquired companies. He also asked CEO Rick Smith about the timing of Dedrone sales to NATO countries, based on his time spent in Europe.

Answer

CFO Brittany Bagley explained that gross margins will be driven by product mix, with software providing tailwinds. For Adjusted EBITDA margins, Axon aims to balance investments for long-term growth with its 25% margin commitment, making ROI-based decisions. President Josh Isner emphasized that investments will be smart and yield ROI, balancing growth and profitability. CEO Rick Smith added that recent acquisitions like Prepared and Carbyne are early-stage, high-potential teams built on modern tech, integrated to enhance the ecosystem rather than mature cash cow businesses. Josh Isner noted that Dedrone sees consistent demand across federal, state, local, and international markets, with significant growth potential, especially in federal and international segments while U.S. regulatory issues are addressed.

Jordan Lyonnais of Bank of America asked for an update on FUSIS's FedRAMP certification status and the company's strategy for D-Drone in Department of Defense programs.

Answer

CPO & CTO Jeff Kunins reported that FUSIS has completed all necessary work for FedRAMP compliance and is awaiting the final official certification. President Josh Isner stated that while he couldn't detail the DOD strategy for competitive reasons, Axon intends to be a strong competitor for those opportunities.

Jordan Lyonnais asked how Axon is positioned to benefit from a proposed DHS budget increase for border security and major events, and what else is needed to accelerate federal deals, such as FedRAMP certification for Fusus.

Answer

President Joshua Isner identified drones, counter-drone technology, and real-time video as key opportunities, particularly for border applications. CEO Patrick Smith highlighted the real-time translator as a capability in high demand at Border Patrol. Executive Jeffrey Kunins confirmed that Fusus has passed its audit for FedRAMP readiness and is awaiting final certification. CFO Brittany Bagley added that any significant acceleration in federal revenue would represent upside to current guidance.

Jordan Lyonnais asked about Axon's go-to-market approach with its Skydio partnership and the SkySwap program, and how federal customers like the DEA or Border Patrol would procure the integrated drone solution.

Answer

President Joshua Isner described the Skydio partnership as a phenomenal fit, filling the void left by DJI. CEO Patrick Smith highlighted Skydio's leadership in drone autonomy, which creates a highly efficient solution when paired with Axon's ecosystem. Isner confirmed that customers can procure the solution on either Axon or Skydio paper, simplifying the process.

Jordan Lyonnais asked about Axon's go-to-market approach with its Skydio partnership and the SkySwap program, as well as how the partnership has been performing so far.

Answer

Joshua Isner, President, called the Skydio partnership a 'phenomenal' fit, filling a market gap as DJI falls out of favor. Patrick Smith, CEO, elaborated that Skydio is the world leader in drone autonomy, creating a seamless integration with Axon's ecosystem that offers a lower total cost of ownership for customers compared to manually operated drones.

Jordan Lyonnais inquired about the potential opportunities and risks from a change in political administration, focusing on border security and tariffs, and asked what levers Axon could pull to mitigate supply chain impacts.

Answer

EVP Joshua Isner emphasized Axon's "apolitical culture" and history of growing under both parties, noting that while there are opportunities in areas like border security, the company's core mission is not party-specific. CFO Brittany Bagley stated they have managed tariffs before and will remain flexible, leveraging multiple supplier sources and U.S.-based TASER manufacturing.

Jordan Lyonnais asked about the growth trajectory for the auto OEM segment into next year, considering retiring product lines versus new contracts. He also sought more detail on the greater drivers of growth within the aviation segment, distinguishing between OEM and aftermarket.

Answer

Cliff Pemble, President and CEO, explained that with the BMW program at peak adoption and legacy programs winding down, 2026 could see revenue pressure, with a new program expected online in the latter half of 2026. For aviation, he noted both OEM and aftermarket were strong and comparable, with OEM benefiting from a long backlog and aftermarket from resilient consumer behavior.

Jordan Lyonnais asked about the recent acquisition of MyLabs, seeking more detail on the strategic opportunity and expected synergies across Garmin's business segments.

Answer

President and CEO Clifton Pemble explained that MyLabs is a leader in timing for competitive events like marathons and motorsports, which overlaps significantly with Garmin's customer base. He highlighted the opportunity to create an integrated experience for athletes from training through race day by merging Garmin's on-device data with MyLabs' official timing technology.

Jordan Lyonnais from Bank of America inquired about any impact on the Aviation segment from the Textron strike. Additionally, he asked what factors provided management with the increased visibility and confidence to raise its full-year guidance.

Answer

President and CEO Clifton Pemble noted the Textron strike had a small, near-term effect but no long-term impacts are anticipated as the company returns to normal operations. He explained that guidance confidence for Q4 increases as the year progresses because plans with retail partners for the holiday season become more concrete during Q2 and Q3, providing a clearer picture of demand.

Jordan Lyonnais inquired about the anticipated impact of the Boeing 737 rate increase on Teledyne's performance in Q4 and next year, given ongoing customer destocking, and also asked about any concerns regarding critical minerals availability for FLIR's sensor products.

Answer

President and CEO George Bobb stated that destocking is expected to continue through most of next year, limiting benefits from the 737 MAX rate increase in 2026, despite strong demand and large orders. Executive Chairman Robert Mehrabian acknowledged some exposure to critical minerals but assured that diligent coverage means no short-term impact is expected.

Jordan Lyonnais from Bank of America inquired about the anticipated impact of the 737 rate increase on destocking trends into next year and raised concerns regarding the availability of critical minerals for Teledyne FLIR's sensor products.

Answer

President and CEO George Bobb stated that 737 MAX destocking is expected to persist through most of next year, limiting benefits from production rate increases in 2026. Executive Chairman Robert Mehrabian acknowledged some exposure to critical minerals but assured that diligent coverage means no short-term impact is anticipated.

Jordan Lyonnais asked about the company's drone exposure, questioning whether the primary opportunity lies in selling its own drone products or in supplying camera systems to the broader market. He also inquired about the impact of recent legislation on R&D tax credits and new programs.

Answer

Executive Chairman Robert Mehrabian stated that while Teledyne's own drones are important, the larger opportunity is selling its EO/IR sensors to all manufacturers, including competitors, to achieve scale and improve margins. Regarding the new legislation, he noted it allows for accelerated R&D write-downs but will also result in about $30 million lower cash tax benefits in the second half of the year.

Jordan Lyonnais asked about the company's drone strategy, specifically whether the focus is on selling its own drone products or supplying camera systems to the broader market. He also inquired about the financial impact of recent R&D tax legislation.

Answer

Executive Chairman Robert Mehrabian explained their strategy is twofold: developing proprietary drones like the Black Hornet and a new weaponized drone, while also generating significant revenue by selling their advanced EO/IR sensors to the entire market, including competitors. He noted the recent legislation allows for accelerated R&D write-downs but could also increase cash tax payments by about $30 million in the second half.

Jordan Lyonnais asked about Teledyne's drone market strategy, specifically whether the focus is on selling camera systems or proprietary drones. He also inquired about the financial impact of recent legislation on R&D tax treatment and new programs.

Answer

Executive Chairman Robert Mehrabian explained the core strategy is to sell sensors broadly to maximize production scale, while also developing their own competitive drones. Regarding the legislation, he noted the benefit of accelerated R&D write-downs but also a potential $30 million increase in cash tax payments in the second half of the year.

Jordan Lyonnais of Bank of America inquired about the outlook for the Aerospace and Defense segment, considering the rising U.S. defense budget and European rearmament efforts.

Answer

Executive Chairman Robert Mehrabian highlighted strong defense sales growth of 18.7% year-over-year in Q1. He stated that Teledyne is well-positioned to benefit from both U.S. and European defense spending increases, citing its unique unmanned systems portfolio and a significant European manufacturing footprint that will be advantageous as domestic content requirements grow.

Jordan Lyons questioned if the 4% organic growth outlook for the defense business was conservative, especially in light of strong government spending trends, and asked if any specific program changes were influencing the forecast.

Answer

Executive Chairman Robert Mehrabian expressed bullishness on the defense business, clarifying that the outlook is strong. He highlighted that FLIR's defense business grew nearly 9% in Q4 and is expected to grow another 6% in the upcoming year. He emphasized that Teledyne's favorable position in unmanned systems, electronic warfare, and EOIR sensors makes it resilient regardless of which specific large programs move forward.

Jordan Lyonnais requested more color on the M&A pipeline, asking what the company is currently looking at and if the new engine exchange program expands potential M&A opportunities.

Answer

Chief Strategy Officer Alex Trapp described the M&A pipeline as robust and confirmed the company remains active in the market. However, he reiterated that their approach to capital deployment remains patient and disciplined, consistent with commentary from previous quarters, while looking for the right strategic fit.

Jordan Lyonnais, on behalf of Ron Epstein from Bank of America, asked for the organic backlog growth rate for the quarter and clarification on whether the delayed contracts had been included in the backlog figures.

Answer

CFO Blaine Browers stated that the organic backlog was flat sequentially compared to the previous quarter, with the reported increase primarily due to the addition of the acquired Cars Engineering division. He clarified that the delayed large opportunities were not yet firm orders and therefore had not been included in the backlog.

Jordan Lyonnais of Bank of America asked for specifics on what product segments are driving the expected sales increase in the fourth quarter.

Answer

CFO Blaine Browers identified the two largest sequential growth drivers for Q4 as the armor and duty gear segments, which have pent-up backlog from the Q3 cyber incident. He also noted that the EOD (bomb suit) business was already expected to have a large Q4, independent of the incident.

Jordan Lyonnais from Bank of America asked how RBC Bearings is thinking about contract renewals and pricing power in the aerospace segment, particularly as OEM production appears to be stabilizing.

Answer

VP & CFO Robert Sullivan responded that the company's strong reputation, built on execution, quality, and on-time delivery, is the key driver of its negotiating position. He stated this performance history gives RBC the ability to successfully develop and renew long-term agreements, positioning them well for future contracts in fiscal 2026 and beyond.

Jordan Lyonnais from Bank of America inquired about how RBC Bearings is thinking about contract renewals and pricing power in the aerospace segment, particularly as OEM production appears to be stabilizing.

Answer

Robert Sullivan, VP & CFO, explained that RBC's strong reputation, built on execution, quality, and on-time delivery, provides the foundation for successfully negotiating long-term agreements. He expressed confidence in their ability to continue developing these favorable agreements with customers in fiscal 2026 and beyond.

Jordan Lyonnais from Bank of America inquired about RBC's pricing power and the outlook for contract renewals in the aerospace sector, given that OEM production appears to be stabilizing.

Answer

VP & CFO Robert Sullivan responded that RBC's ability to successfully negotiate long-term agreements stems from its strong reputation, which has been earned through consistent execution on quality and on-time delivery, rather than being solely dependent on OEM production stability.

Jordan Lyonnais from Bank of America inquired about the current M&A pipeline and whether there have been any notable changes in the market for potential acquisitions.

Answer

Executive Mike Hartnett responded that the team has been very active and is looking at many alternatives. He emphasized that they remain very selective, with synergy being a critical factor. He confirmed the balance sheet is in a strong position to act quickly on an attractive opportunity, and that progress is being made in evaluating candidates.

Jordan Lyonnais of Bank of America requested more detail on the growth within the space sub-segment and asked which other defense end markets were demonstrating the most strength.

Answer

CEO Dr. Michael Hartnett confirmed that the space business had another solid quarter, growing approximately 40% year-over-year. He added that the rest of the Defense segment was 'pretty balanced,' with missiles, guided ammunitions, and fixed-wing aircraft being particularly strong categories.

Jordan Lyonnais, on for Ron Epstein, asked about areas of strength in the defense backlog beyond the prominent missile defense segment.

Answer

Co-CEO Victor Mendelson confirmed that while missile defense is a standout, there is broad strength across other areas like launch vehicles, drones, precision-guided munitions, and targeting systems. He emphasized that HEICO's components are on a wide array of platforms and he is not complaining about any current defense segments.

Jordan Lyonnais from Bank of America asked about the potential impact of the recent Pratt & Whitney strike on Embraer's operations and deliveries.

Answer

CEO Francisco Gomes Neto responded that the company is currently gathering more information on the strike and does not yet have enough details to accurately measure its potential impact on the business.

Jordan Lyonnais questioned the expected production ramp for the Boeing 787 and 777X programs through the rest of the year and asked where the company is monitoring for second-order impacts from tariffs.

Answer

President and CEO Gunnar Kleveland responded that the company has a cautious outlook for the 787, expecting very slow growth this year with an acceleration in 2026. The 777X program's progress is dependent on its certification. Regarding tariffs, Kleveland stated they are monitoring major customers and suppliers like International Paper, GE, and Safran, as well as the dynamic tariff landscape, but the current outlook for second-order impacts is relatively flat.

Jordan Lyonnais of Bank of America asked about the company's approach to potential China tariff risks and whether they are factored into guidance. He also inquired about concerns regarding potential cost-down pressure from the U.S. administration on new defense programs.

Answer

CEO Gunnar Kleveland stated that while uncertainty is high regarding tariffs, the impact from China is 'de minimis,' and the company has done the analytical work to be prepared. Regarding defense programs, he acknowledged potential pressure but expressed confidence in the stability of their programs due to a focus on long-term contracts, while noting that volumes could change depending on which programs are targeted.

Jordan Lyonnais of Bank of America Corporation asked for a long-term outlook on the 787 and GE9X programs, considering recent airframe production softness and delays.

Answer

President and CEO Gunnar Kleveland stated that the company expects growth from the 787 program due to strong, unaffected demand. He acknowledged the GE9X program delay but anticipates a minimal impact on revenue for the upcoming year as the engine is still in development.

Jordan Lyonnais, on for Ron Epstein, asked what has changed in HII's hiring initiatives and inquired about the potential impact of a new administration's policies (referenced as 'DOGE') on HII and its Mission Technologies segment.

Answer

President and CEO Christopher Kastner explained that the hiring strategy has been refocused from broad entry-level recruitment to targeting more experienced shipbuilders, a shift supported by wage increases and workforce development funding. Regarding a new administration, he stated that shipbuilding is a known priority and that HII would welcome and participate in any initiatives aimed at reducing regulation and improving cost and delivery schedules.