Michael Anastasiou

Michael Anastasiou, an Equity Research Analyst at TD Cowen, inquired about the drivers of the Aerospace & Defense (A&D) segment's performance, specifically asking if content growth was related to FARO and for expectations on a normalized growth range for A&D going forward.

Answer

Chairman and CEO David Zapico clarified that FARO is not in the A&D segment and does not contribute to its performance. He stated that A&D organic growth was up low double digits in the quarter, with strong and balanced growth across commercial OEM, aftermarket, and defense markets. The segment continues to win content on new programs and expand on existing platforms, maintaining a strong backlog and an optimistic outlook, with full-year guidance confirmed at high single digits.

Michael Anastasiou inquired about the Aerospace & Defense (A&D) performance, specifically if content growth was related to FARO, and asked for expectations for a normalized growth range for A&D going forward.

Answer

David Zapico, Chairman and CEO, clarified that FARO is not part of the A&D segment. He highlighted A&D's low double-digit organic growth in the quarter, balanced across commercial OEM, aftermarket, and defense, with a strong backlog and solid positions on key programs, maintaining an optimistic outlook.

Michael Anastasiou of TD Cowen asked about potential pre-buying in the connectors market and how aerospace inventory destocking might affect the anticipated OE production ramp.

Answer

CFO Emmanuel Caprais stated there is no evidence of pre-buying in the general connector market, with distributor inventories appearing healthy. However, he acknowledged evidence of excess inventory specifically within the aerospace channel. He anticipates a recovery in aerospace orders in the second half of the year, which should translate to revenue improvement toward year-end.

Speaking for Joe Giordano, Michael Anastasiou asked about the emerging customer initiative's revenue potential, questioning what the uplift could be in a more normalized factory automation market, given its current success in a weak environment.

Answer

CEO Robert Willett clarified the 'almost $1 million per week' booking rate is a growing figure, not a static cadence, and declined to quantify the potential uplift in a better market. He and CFO Dennis Fehr emphasized that since the new sales team now serves existing accounts, not all revenue is incremental, making it difficult to parse out a specific uplift figure.