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CEO William Ballhaus stated that while precise timing is difficult, he expects to work through the unbilled receivables headwind significantly during fiscal 2026. EVP & CFO David Farnsworth added that the company's long-term target for net working capital is in the 35% of sales range, depending on the business mix.

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CEO Will Ballhaus stated that Mercury is ramping up LTAMDS production in line with its customer's schedule and is excited about its growth prospects. CFO Dave Farnsworth explained that the rise in deferred revenue stems from improved contract terms with milestone-based payments, including upfront customer payments for end-of-life component buys, which can also increase inventory.

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CFO Dave Farnsworth explained that first-half cash flow was ahead of expectations, partly due to achieving contract milestones which significantly increased deferred revenue. He clarified that in the second half, the company will perform work against this collected cash, leading to a reduction in the deferred revenue balance. This drawdown is expected to offset cash generation from other activities, resulting in a roughly breakeven free cash flow for the period.

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CEO William Ballhaus described the reduction in unbilled receivables as a gradual transition as development programs conclude and shift to production, noting that engineering resources are now allocated to support this ramp. Regarding R&D, he anticipates an incremental increase to fund innovation but does not expect any major swings back to historical percentage levels.

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CEO Eric DeMarco explained that Kratos is exceptionally well-positioned for Golden Dome, providing ground systems, hardware for interceptors, and the target drones needed for testing. He updated the growth driver ranking to: 1) Hypersonics, 2) Air defense and missile systems hardware, and 3) Jet engines, noting that tactical drones could leapfrog to the top if and when major contracts are awarded.

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CEO Eric DeMarco explained that Kratos's involvement is in ground systems (C2, TT&C, SATCOM), which benefit as more space assets are deployed for programs like Golden Dome and for space domain awareness. Regarding the Valkyrie, he confirmed the landing gear variant is tracking to fly "soon this year" but declined to provide further details for security reasons.

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CEO Eric DeMarco stated that while details on the foreign Valkyrie selection are limited, it is a significant development not yet included in the 2025 forecast, representing potential upside. He noted progress on tactical fire jets like Apollo and Athena, highlighting their relevance to non-Air Force customers. Regarding engines, DeMarco anticipates initial low-rate production orders in the first half of 2025, with 2026 potentially being a 'breakout year' for small jet engine production.

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CEO Tony Koblinski expressed confidence in the company's ability to meet demand, citing ample facility square footage and ongoing investments in advanced machinery. He noted the record $719 million backlog provides visibility into future years but emphasized the immediate focus is on executing the significant growth forecasted for fiscal 2025.

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CEO Tony Koblinski expressed confidence in the company's ability to meet demand, citing ample square footage and ongoing capital investments to stay ahead of the demand curve. Regarding the 2026 backlog, he highlighted the current record backlog of $719 million and emphasized that the immediate focus is on executing the 32% year-over-year growth guided for fiscal 2025.

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VP & CFO K. Christopher Farkas cited restructuring, operational excellence, and pricing as margin drivers but noted caution due to an upcoming ERP implementation and a planned R&D ramp. President, CEO & Chair Lynn Bamford added that top-line drivers support margins and confirmed she expects the flight data recorder retrofit activity to accelerate, highlighting the regional jet market and a potential Airbus qualification in 2026.

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CFO Chris Farkas explained that the 2025 growth rate is tempered by a cyclical headwind of fewer planned domestic outages compared to the prior year, but the company remains confident in its low double-digit CAGR target over the three-year period. CEO Lynn Bamford confirmed that the long-term fivefold growth projection is based on an organic build-up from anticipated content on AP1000s, plant life extensions, and the future SMR build-out.

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CEO Lynn Bamford credited the Defense Electronics success to organic execution, leading product offerings, and strong customer satisfaction, stating significant market share gains are future opportunities. She confirmed the bright outlook for commercial nuclear, driven by plant life extensions and restarts, and detailed the company's strategy to be a universal supplier to all major SMR designers, including Westinghouse, NuScale, TerraPower, and Rolls-Royce.

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President and CEO John Mengucci reported great success and strong demand for its technology, noting progress on space optical terminals for Tranches 0, 1, and 2, despite some supply chain-related production slowness. He sees no significant impact from IT contracts moving to the GSA, as CACI's major DoD and intelligence community IT programs are expected to remain with their respective agencies.

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CEO John Mengucci affirmed that a reduction in government staff presents a growth opportunity for CACI to provide technology and expertise, similar to what occurred during sequestration. CFO Jeffrey MacLauchlan reiterated that the company's target leverage range is 2.5x to 3.0x, with the quarter ending at 2.9x.

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CEO Thomas Bell acknowledged the large award but stated it was not a surprise given the administration's focus on commercial technology. He framed it as an opportunity for Leidos to continue being a commercial disruptor, emphasizing that the company's focus on 'Trusted Mission AI' remains a key differentiator that resonates with customers and positions them well in the market.

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CEO Tom Bell stated that the top-line revenue impact from recent administration actions was negligible and offset by new opportunities. CFO Chris Cage explained that a recent change in backlog policy, which now includes single-award IDIQs, did not benefit the Health & Civil segment as much as others, and noted key recompetes like MHS Genesis are still pending.

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CEO Thomas Bell stated he is "eager" to grow outcome-based contracting across all segments, as Leidos excels at using technology to deliver customer savings and shareholder value. CFO Chris Cage added that they are seeing opportunities for this in digital modernization and that future defense production programs, like those supporting IRON DOME, will likely be fixed-price.

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CEO Thomas Bell described the wins as a significant achievement for the National Security and Digital segment, which he called the "core of the core" of Leidos. He noted that while much of the work is for classified intelligence community customers, the company's cyber capabilities also serve as a key differentiator in other markets. CFO Chris Cage added that these investments are positioning Leidos for more robust growth in this area heading into 2025 and beyond.

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Executive Chairman and CEO John Plant acknowledged that productivity has been solid in three of four divisions. He explained that the aggregate productivity in the Engine business is weighed down by the significant hiring in preparation for future capacity. While automation has helped, the current focus is on investing capital for capacity and market share. He stated the company will "go back and mop up" remaining productivity opportunities in 2027 or 2028 once the major capacity ramp is complete.

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President & CEO Gunnar Kleveland explained that the company is gradually ramping up with Boeing and has reached contractual inventory levels for the LEAP program. He noted that second-half performance depends on Machine Clothing recapturing lost revenue and AEC's growth in commercial programs. For the CH-53K, Kleveland expressed confidence in reaching the two-per-month production rate by year-end, citing that all assembly jigs now have parts in them.

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President and CEO Gunnar Kleveland stated that while Safran is currently using some inventory for the LEAP program, Albany expects to reach required levels by the end of H1 2025 and sees potential upside in the second half. He confirmed new business opportunities exist in space and missile programs, allowing Albany to be selective. Regarding the CH-53K, Kleveland noted that the improvement plan is working effectively due to better leadership, training, and onboarding, leading to lower EACs and optimism for continued progress.

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CEO Gunnar Kleveland confirmed the cautious LEAP outlook is a function of both inventory burn-off and prudence regarding Boeing's recovery, noting alignment with Safran. He expressed confidence in the CH-53K program's path forward, citing new leadership and talent additions in supply chain, planning, and operations. CFO Robert Starr added that the company can ramp LEAP production quickly and will continue to focus on improving working capital balances, particularly by integrating Heimbach.

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President and CEO Gunnar Kleveland reported no material changes to the Gulfstream contract and noted significant but unspecified opportunities in classified defense, pointing to the growing backlog. Robert Starr elaborated on the Q4 AEC guidance, expressing high confidence based on higher-margin volume growth and expense controls, which implies a midpoint margin of 17.5%.

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Chairman & CEO William Lynn stated that Golden Dome orders are not expected in calendar 2025 but could begin to roll out in 2026. Regarding M&A, he noted that while DRS is actively looking, rising prices in the sector are a factor, and the company is assessing its strict financial criteria, with more flexibility on ROIC for strategically aligned targets.

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CEO William Lynn explained that margin improvement is also driven by smaller sensing and force protection programs transitioning from development to production. He noted that over-the-horizon radar is a growing opportunity as DRS moves into prime contracts. Lynn also highlighted that since DRS's portfolio is already ~85% fixed-price, the company is well-positioned and expects the rest of the industry will need to adopt similar rigorous bidding and risk management processes.

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CEO Bill Lynn explained that force protection demand is driven by the strategic shift to peer competitors and the growing drone threat, noting that existing facilities are sufficient. He clarified the new Charleston facility is for insourcing to improve efficiency. CFO Mike Dippold added that the 2025 guidance already accounts for a potential Continuing Resolution, as most revenue is from existing backlog.

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President & CEO Kelly Ortberg emphasized a 'one step at a time' approach. For the 787, after moving to 7 per month, the focus is on stabilization before considering further increases, though investments are being made for future growth. For the MAX, after stabilizing at 38 per month, Boeing will approach the FAA for approval to increase to 42, with future rate hikes planned in increments of five no sooner than every six months, contingent on stability.

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President and CEO Robert Ortberg confirmed that the plan is to use the same FAA review process for every future rate increase. The FAA will have continuous access to a digital dashboard of KPIs, and Boeing will not advance to a higher rate until the system is stable. He suggested the first rate increase may take the longest, with subsequent reviews becoming more standardized.

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CFO Brian West confirmed that the 2025 free cash flow outlook is largely consistent with prior commentary, with minor negative adjustments for higher CapEx and BDS charges. He reiterated a negative first half and positive second half, resulting in a net cash usage for the year but with strong momentum exiting 2025. West affirmed that a cash outflow in the ~$5 billion range is a 'reasonable ballpark.'

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President and CEO Kelly Ortberg reaffirmed the company's commitment to the Spirit AeroSystems acquisition, which is expected to close next year. He stated that Boeing is already working closely with Spirit to improve quality and performance, which is critical for production ramp-ups. He believes bringing Spirit in-house will enable a step-change improvement through tighter integration.

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Scott C. Donnelly, Chairman, CEO & President, stated that Aviation margins are on track with expectations, with a more challenged first half and an expected improvement in H2 driven by a strong production ramp. He also confirmed that demand remains strong across the portfolio, with good order flow and customer excitement for the new Gen II and Ascend models.

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Chairman and CEO Scott Donnelly stated that the CR's impact is generally minimal, as amendments allowed key programs like FLRAA and Ship-to-Shore Connector to proceed as expected. On the Denali, he called the engine certification 'hugely important,' noting the program is now back in the queue with the FAA for aircraft-level certification and that the aircraft itself is performing very well.

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Scott Donnelly, Chairman and CEO, stated that cash flow will be back-end loaded, with Q4 2024 cash impacted by high inventory for jets that did not deliver. He affirmed confidence in the $800-$900 million guidance range. Regarding demand, Donnelly described it as strong across the entire product line, with particular strength in light jets following the Gen 3 announcements, and projected a sustained book-to-bill ratio of approximately 1:1 for 2025.

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CEO Scott Donnelly described demand as strong, citing over $1 billion in Q3 orders and positive reception to product updates. On pricing, he noted that while the environment remains favorable, the gap between price increases and inflation is narrowing, shifting the focus toward productivity and efficiency for future margin growth.

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CEO James Taiclet responded that while Lockheed Martin is discussing architecture with the government, there are no contracts or bid proposals for Golden Dome yet, so it cannot be quantified for the backlog. CFO Evan Scott confirmed a strong cash second half is expected, led by the F-35, with the Lot 18-19 award anticipated to be a significant cash liquidation event.

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CEO James Taiclet suggested that policy changes like more multiyear contracts could accelerate backlog growth. CFO Jesus Malave confirmed a clear line of sight to further growth in 2025, highlighting several multi-billion dollar opportunities, including the F-35 Lot 19 order (~$10B), a JASSM/LRASM multiyear contract, F-35 sustainment, and the CH-53K Lot 9 contract.

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CEO Christopher Calio emphasized that the Patriot system is a key part of near-term defense solutions like 'Golden Dome' and is seeing strong demand across Europe. Regarding LTAMDS, he noted the program achieved Milestone C, initiating production, with six units delivered to the U.S. government. He stressed the powerful opportunity to integrate the advanced LTAMDS radar with the large existing global fleet of Patriot systems.

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Executive Chairman and CEO Christopher Calio confirmed that increased European Union defense spending presents a clear opportunity for Raytheon's core integrated air and missile defense systems like Patriot and NASAMS, supported by strong European partnerships. He affirmed that the company still expects a book-to-bill ratio of 1.0 or more for the Raytheon segment for the full year.

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Executive Christopher Calio highlighted Raytheon's strong position, citing a $63 billion backlog and a 1.48 book-to-bill ratio. He detailed that U.S. demand is focused on replenishment, European demand is for integrated air and missile defense, and Asia-Pacific demand is for naval munitions, with overall international demand remaining a strong tailwind.

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Executive Neil Mitchill affirmed confidence in the current year's $4.7 billion free cash flow target, highlighting working capital as a significant opportunity for improvement. Looking long-term, he stated there is no reason the business won't achieve 90% to 100% free cash flow conversion on adjusted net income. Executive Christopher Calio added that strong profit growth in the high-margin aftermarket business is a fundamental driver of this expected cash flow growth.

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CEO Wahid Nawabi attributed the wide guidance range primarily to the unpredictable timing of U.S. DoD contract awards and budget approvals. He emphasized that the combined company is 'purpose-built' for the current environment, aligning with over two-thirds of the DoD's highest priorities, including drones, counter-drones, directed energy, and space communications, positioning it for strong long-term growth.

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Wahid Nawabi, Chairman, President and CEO, clarified that the stop-work orders total approximately $13 million for foreign military sales (FMS) contracts and that their future is currently unclear, though he believes the customers have a serious need for the capabilities. Regarding UxS, he expressed confidence in its long-term growth, driven by new products like the P550 and major DoD programs, despite FY25 being a transition year away from Ukraine-related revenue.

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Wahid Nawabi, Chairman, President, and CEO, clarified that the UXS segment's revenue decline was an expected result of transitioning away from a large, prior-year Ukraine order. He affirmed long-term confidence in the segment, citing strong demand for Puma, a JUMP 20 pipeline exceeding $500 million, and the new P550 platform's potential in the $1 billion LRR program. On the Replicator initiative, Nawabi described AeroVironment as a "poster child," confirming significant Switchblade 600 shipments have already occurred. He also noted that while awaiting a decision on a contract protest, the company has received authorization to continue shipments.

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CEO Wahid Nawabi confirmed expectations for more Switchblade orders this fiscal year, noting a growing international pipeline with over half a dozen countries actively engaged. He stated that current capacity can support nearly $500 million in annual Switchblade revenue and that the company is already planning a new factory for future needs. Nawabi clarified that the Taiwan order, along with potential Ukraine and Replicator orders, is not yet reflected in the funded backlog but is expected to be booked during the fiscal year.

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Co-CEO Victor Mendelson reiterated that the company expects any tariff impact to be largely immaterial and passed on to customers over time. Co-CEO Eric Mendelson stated that while PMA output has increased, the primary focus is on market penetration and ensuring they can fully support the new products.

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Victor Mendelson, Co-President, highlighted that the defense and commercial aviation parts of ETG have been extremely strong with double-digit growth, and he sees order rates bottoming out in other markets. CFO Carlos Macau noted that defense is currently about 40% of ETG sales but should grow to 50% over time. Regarding leverage, he stated the goal is to find profitable, high-margin acquisitions that keep leverage under 3x.

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Co-COO Mike Lisman responded that the situation is component-specific and varies across operating units based on Boeing's inventory. He stated that, in aggregate, purchase orders are "in and around sort of that rate per month ballpark on the MAX that you would expect," but with puts and takes across their businesses.

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CFO Sarah Wynne explained the increase is driven by investments in newly acquired businesses and significant new productivity projects, such as robotics. Co-COO Mike Lisman added that these CapEx investments are crucial for driving cost structure improvements and margin expansion.

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EVP and CFO Robb LeMasters confirmed the booking represented the final order for the Pickering steam generators. CEO Rex Geveden added that the Department of Energy is actively encouraging the TVA's Clinch River SMR project and is leaning in hard to enable commercial SMR capability in the U.S., positioning BWXT well with its domestic manufacturing.

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EVP & CFO Robb LeMasters and President & CEO Rex Geveden explained that as the Darlington project winds down, the Bruce and Pickering projects will be ramping up. They noted the Pickering project is a particularly rich opportunity for BWXT. LeMasters confirmed that this work is already driving an acceleration in the core commercial power business to double-digit growth in 2025, with a strong outlook for continued growth.

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CFO Robb LeMasters detailed that 2025 commercial growth will be driven by large-scale refurbishments like Pickering, the recurring Canadian fleet business, and a ramp-up in work for the GE-Hitachi BWRX-300 SMR project. CEO Rex Geveden stated they submitted a compelling proposal for the Defense Innovation Unit RFP and are awaiting a government decision. On CapEx, LeMasters indicated 2025 spending would be similar to or slightly higher than 2024 levels but emphasized the company is committed to its free cash flow growth target regardless.

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SVP and CFO Shawn Mural clarified that remaining recompetes are minimal, down to 1-2% of 2025 revenue. President and CEO Jeremy Wensinger confirmed that large, billion-dollar pursuits include international opportunities. Mural added that the company is comfortable with its leverage ratio and expects it to improve sequentially, and noted that the impact from the CR has been modest and has not caused significant perturbations.

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President and CEO Jeremy Wensinger confirmed V2X has a history of converting mature programs to fixed-price and continuously presents these opportunities to customers, aligning with the administration's focus on outcomes. Both Wensinger and CFO Shawn Mural stated the business is largely immune to the CR, and guidance assumes a resolution. Mural clarified the WTRS program is expected to add approximately $120 million in revenue year-over-year, primarily in the second half of 2025.

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President & CEO Jeremy Wensinger explained that INDOPACOM growth is tied to the long-term Pacific Deterrence Initiative, while Middle East activity is more dynamic and driven by current events, with V2X's presence allowing for rapid response. SVP & CFO Shawn Mural confirmed the W-TRS program will begin to ramp in the second half of 2025 from its initial $225 million booking. Wensinger added that the team is already developing offerings for allied nations under the contract framework.

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CEO Kathy Warden confirmed the $3.5 billion TACAMO award passed its protest period and is underway, with about $350 million in revenue expected in the first year. Regarding future aircraft, she stated that Northrop is well-positioned for 6th-gen opportunities based on its B-21 experience but is not including them in forecasts yet. She also noted Northrop is a contributor to the Navy's NGAD program through its Mission Systems segment.

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CFO Mark Suchinski confirmed the margin was within their 12-14% target range and did not include significant one-time benefits. He attributed the strong result to solid execution across contracts, including notable improvements on the CH-53K program, and expressed confidence in the team's ability to maintain this performance.

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