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Co-COO Mike Lisman responded that the supply chain continues to improve but is not yet at pre-pandemic efficiency, with castings and certain electronics remaining as pain points. Regarding the St. Louis strike, he noted it is a headwind but a much smaller one than a commercial strike would be, given TransDigm's relative defense exposure.

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Co-COO Mike Lisman reported that the freight business performed well in Q2, with growth exceeding the 13% overall for the commercial aftermarket. Regarding software-enabled hardware, Lisman reiterated that all M&A opportunities are evaluated against their disciplined financial model targeting a 20% IRR, and this approach will not change.

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CEO Kevin Stein stated he does not speculate on political impacts but noted that fiscal 2024 was a record year for the number of transactions and he doesn't see the environment slowing. Regarding specific assets, he declined to comment on public company M&A but acknowledged some larger assets look 'possibly attractive'.

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CEO Francisco Neto and CFO Antonio Garcia addressed the points, stating there are no plans to spin off Eve due to strong synergies. They confirmed ongoing R&D but no new aircraft programs to announce. They believe the current U.S. executive jet footprint is well-balanced and competitive. Finally, they highlighted strong E2 sales momentum globally following recent orders from ANA and SAS.

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CEO Francisco Neto stated the focus is on execution through 2030 to fund any future program, calling the current guidance 'realistic' rather than conservative. He also noted strong global interest in the KC-390, with active campaigns in Europe and Asia, and highlighted the potential for a major U.S. order, which would lead to the aircraft being produced in the U.S.

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President and CEO Francisco Gomes Neto highlighted a strong start to the year with orders from American Airlines and Mexicana. He assured that Embraer is actively engaged in numerous sales campaigns across all global regions and expressed confidence in announcing new orders in Q3 and the remainder of the year.

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CEO John Plueger stated that Boeing's production has been stable relative to its November 2024 outlook, while Airbus has also been stable since its last update, though he noted potential risk due to its higher production rate. EVP & CFO Gregory Willis corrected the premise of the follow-up question, clarifying that portfolio yields on an average asset basis did, in fact, increase during the quarter and are expected to continue tracking upward.

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Executive Chairman Steven Udvar-Hazy stated that the timeframe for market equilibrium is stretching out, not shortening, due to persistent engine and supply chain shortages. He confirmed airlines are flying older aircraft longer, which increases demand for lessors. He also noted that while there is room for a third OEM, a major challenge would be securing a next-generation propulsion system that offers a step-change in reliability.

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CFO Gregory Willis suggested that as lease yields improve and the Fed eases, the net interest margin should see some expansion in the near term. Executive Chairman Steven Udvar-Hazy commented that while a third OEM would be welcome for competition, the capital, regulatory, and logistical hurdles are immense, making it unlikely in the near future. He noted the current headwinds for a new entrant are greater than the tailwinds.

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EVP and CFO Thomas Stiehle explained that the R&D tax law change was the primary driver for the $150 million increase in the 2025 free cash flow guidance. President and CEO Christopher Kastner added that while the UUV business size is not disclosed, it is expected to have 'outsized growth' and highlighted significant opportunities like a potential 200-vehicle Navy contract.

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President and CEO Christopher Kastner explained that defense shipbuilding is less suited to heavy automation due to complexity, with improvements focused on process efficiency and streamlining. He reported that demand for unmanned systems is 'really good,' with a significant backlog and ramp-up potential for its uncrewed underwater vehicles both domestically and internationally.

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CEO Christopher Kastner responded that their assumptions for navigating pre-COVID contracts were 'a little bit too optimistic.' He deferred providing 2025 margin guidance until January, pending Q4 execution and clarity on new submarine contracts. He agreed that higher pay is a key lever for improving retention and performance, confirming it is a focus in discussions with the Navy.

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Chairman & CEO William Lynn explained that as a major sensor house, germanium is a critical input for DRS. He identified permanent magnets as another key material. For shipbuilding, he cited future opportunities in electric drive for the DDG(X) and SSN(X) platforms. On the FY27 budget, he suggested the administration's goal will be sustained, predictable growth to counter threats, likely achieved through a combination of budget bills and possibly another reconciliation.

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CEO William Lynn suggested that a budget reallocation could benefit DRS, as funds may shift to missile defense and counter-UAS, which are core areas for the company. He noted a continuing resolution would be more of a 2026 issue, as 75% of 2025 revenue is in backlog. Regarding FMS, he believes European urgency for proven capabilities could drive demand for DRS's systems, offsetting any tapering in Ukraine-related sales.

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CEO Bill Lynn and CFO Mike Dippold described a multi-pronged M&A strategy involving a dedicated team, proactive outreach, and leveraging partnerships as an 'acquisition incubator'. Lynn noted that while a Boeing deal is always possible, nothing is currently actionable. He characterized the counter-UAS market as being in the early stages, with international sales representing the next major growth opportunity.

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President & CEO Kelly Ortberg clarified that the delay stems from engineering design challenges. Recent testing of a potential solution revealed issues with airflow perturbation into the engine inlet, requiring the team to 'back up and make some additional design changes.' This has extended the timeline for finalizing a certifiable solution.

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CEO Kelly Ortberg stated that a detailed portfolio review is complete and the company's approach will be 'more pruning the portfolio, not cutting down the tree.' He emphasized that this will not be a major restructuring but a streamlining of non-core areas to reduce bureaucracy. He declined to comment on specific assets but indicated actions would occur over the coming months and year.

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President and CEO Kelly Ortberg outlined his vision for Boeing to regain its leadership position in aerospace and defense through disciplined execution on its existing backlog. He stated that the immediate focus is on executing well, not pursuing new market opportunities, as demand for current products is already strong. He noted that a new airplane is needed in the future, but the company must first stabilize the business and restore the balance sheet.

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Chairman and CEO Christopher Kubasik highlighted significant international growth, particularly in European demand for software-defined radios where L3Harris is displacing incumbent providers. He stated that the current strategy of partnering with local companies is effective, though the company remains agile and can establish a physical presence if needed, as it did in Poland.

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Chairman & CEO Christopher Kubasik highlighted strong international growth, particularly in European demand for software-defined radios where L3Harris is displacing indigenous providers. He stated that the current strategy of partnering with local companies, rather than building a large physical footprint, is working well, though they remain agile and can adjust as needed, citing a past factory opening in Poland as an example.

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CEO Christopher Kubasik clarified that no Golden Dome awards have been made yet, but L3Harris is well-positioned, particularly with its HBTSS satellite, which is the only proven on-orbit system for tracking hypersonic missiles and is specifically mentioned for acceleration in the executive order. Executive Kenneth Bedingfield added that prior investments in missile warning and tracking factories in Fort Wayne and Palm Bay align perfectly with the initiative's needs, and the Aerojet Rocketdyne acquisition provides critical interceptor and target capabilities.

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CEO Christopher Kubasik stated that while the M&A environment may be more favorable, the company's primary focus remains on its operational playbook of partnerships, share repurchases, and organic growth. He highlighted collaborations with firms like Palantir and investments in over 40 venture-backed companies as the preferred method for accessing new technology, rather than pursuing large acquisitions.

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An unnamed executive, likely CEO Scott Donnelly, reiterated that the primary focus for capital deployment is opportunistic share buybacks, which they expect to continue through the second half of the year. He added that while the company has the capacity for acquisitions if a good opportunity arises, share repurchases currently offer the best return for shareholders.

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Chairman and CEO Scott Donnelly explained that while Textron supports other companies electrifying the Caravan, it is not doing so itself but has arrangements to potentially incorporate a certified electric design into its production line if demand is sufficient. On M&A, he said Textron is always looking but has found deal multiples to be 'a little bit on the nutty side' and will only pursue deals that are accretive to shareholders.

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Scott Donnelly, Chairman and CEO, agreed that a pro-business climate with favorable tax and regulatory policies generally boosts customer confidence for capital expenditures like aircraft. On defense contracting, he noted that previous efforts to accelerate acquisition were beneficial and he is hopeful the new administration will also prioritize speed, which would be a net positive for Textron's programs, though he did not comment on a specific new platform.

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CEO James Taiclet clarified that the review process was reset in Q4 2024, and the new, more rigorous monitoring system uncovered additional cost risks this year, which, when flowed through multi-year fixed-price obligations, resulted in the large charge. CFO Evan Scott specified the cash impact, stating a $500 million cash usage from the classified program is included in the reiterated 2025 guidance, which will step down to approximately $400 million in 2026.

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Chairman, President & CEO James Taiclet clarified that the new, more rigorous monitoring system implemented after Q4 revealed new cost risks and development anomalies. When flowed through multi-year fixed-price obligations from 2018, these new discoveries resulted in the large charge. CFO Evan Scott detailed the cash impact, stating a $500 million cash usage from the Aero classified program is baked into 2025 guidance, which will step down to approximately $400 million in 2026.

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CEO James Taiclet clarified that NGI is an 'integral part' of a much broader, multi-layered homeland defense system that must also counter hypersonic missiles, cruise missiles, and drones. He described it as a comprehensive solution for a multi-domain threat environment. He declined to comment on the Greenland question, stating it was a U.S. government policy matter outside the company's purview.

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CEO James Taiclet explained that Lockheed Martin is preserving optionality by investing in sixth-generation technologies at Skunkworks while also developing systems, like a new pod, to enable the F-35 to control CCAs. He emphasized that Increment 2 is targeted to be a scalable, combat-ready system for which Lockheed Martin will eagerly compete. CFO Jesus Malave added that the company's multiyear financial outlook accounts for significant investments in autonomy and AI.

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Chair, CEO & President Kathy Warden attributed the strong international growth to a 'generational shift' in European defense spending, with a strong book-to-bill and broad demand across weapons, missile defense, and aircraft. Regarding Sentinel, she explained that substantial progress on the weapon system, a restart of work on the command and launch segment, and a more collaborative approach with the Air Force improved the company's outlook and confidence in meeting program milestones.

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CEO Kathy Warden attributed the B-21 charge to a defined process change for higher production rates and an underestimation of material costs, noting these learnings are not expected to repeat. For Sentinel, she highlighted it is a cost-plus contract and the company is working with the Air Force to identify cost efficiencies.

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CEO Kathy Warden affirmed that Northrop Grumman is well-positioned to support a U.S. missile defense architecture, citing the company's end-to-end capabilities in launch disruption, satellite-based tracking, and interceptor development. She also clarified that while B-21 and GBSD will contribute to 2025 growth, their growth rates will be more modest than in the past, with both programs combined remaining under 10% of total company sales.

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Chair, CEO and President Kathy Warden responded that supply chain challenges are broad-based and supplier-dependent, spanning from microelectronics to solid rocket motors, rather than being concentrated in one area. She noted that while the situation is improving, risks will likely persist into 2025. Warden clarified that the company's primary strategy is to support suppliers, viewing vertical integration as a last resort.

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CEO Christopher Calio confirmed that RTX is seeing increased stability in production rates at Boeing and that RTX has the capacity to support their needs. For Airbus, he noted the A320 continues to ramp, though a recent work stoppage had a minor impact that is expected to be recovered. He emphasized the ongoing focus on balancing material allocation between new engine production and MRO support for the existing fleet.

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Executive Chairman and CEO Christopher Calio did not provide a specific timeline but highlighted that Pratt & Whitney received a $550 million award in Q1 to advance its next-generation engine program. He expressed satisfaction with testing progress and customer feedback, reinforcing Pratt's strong track record in providing advanced fighter propulsion technologies.

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Executive Christopher Calio stated that RTX has been pleased with the rigorous testing of its NGAP solution and the new funding will help de-risk the program. CFO Neil Mitchill added that NGAP, along with the F135 Engine Core Upgrade, is a key contributor to the mid-single-digit growth forecast for Pratt's military business and represents a clear tailwind.

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Executive Christopher Calio described the situation as both a threat and an opportunity. He stated that while RTX remains vigilant about competition, its key advantage is the ability to scale sophisticated production. He also acknowledged learning from the agility of newer players. Calio confirmed RTX is actively seeking partnership opportunities, particularly in software, and is using its RTX Ventures arm to invest in early-stage companies to integrate new technologies into its product portfolio.

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Chairman & CEO Lawrence Culp attributed the confidence to significant technical progress, with over 350 program tests completed, and strong alignment with industry partners like Airbus. He emphatically stated that GE Aerospace is "all in" on the open fan architecture, signaling it as their primary path forward for next-generation narrowbody propulsion.

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Chairman and CEO H. Culp stated that the company has been actively managing this risk. He expressed confidence that between alternative sourcing strategies and existing inventory positions, both at GE and with its partners, there are no immediate issues. He concluded that this specific concern is not currently high on the company's worry list.

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CEO H. Culp stated that the company's current focus is entirely on supporting the launch of the Boeing 777X. He emphasized the engine's extensive testing, noting it's approaching 2,500 cycles and is on its second iteration of HPT blades. Culp expressed confidence in the program, highlighting a backlog of nearly 1,000 engines.

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Executive H. Culp attributed the dynamic to broad supply chain challenges impacting all engine programs. Executive Rahul Ghai added that there is a constant balance between supporting internal shop visits and selling spare parts to the external MRO network. In Q3, GE prioritized spare part sales to reduce overall turnaround times for airlines, resulting in higher part sales but flat internal shop visits year-over-year. He noted a strong backlog of shop visits entering Q4.

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Horacio Rozanski, Chairman, CEO and President, described the shift to commercial tech as a net positive, highlighting Booz Allen's role as a preferred partner for 'missionizing' commercial solutions. Regarding branding, he attributed the media attention to being a market leader and stated the company is improving its storytelling and that the quality of its technology and direct government relationships ultimately strengthen the brand.

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CEO Steve Altemus explained that a continuing resolution would have minimal impact as major programs are underway. Regarding IM-2 payments, he cited the complex closeout process for the timing and expressed confidence based on ongoing discussions. On M&A, he described their approach as opportunistic.

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CEO Steve Altemus viewed the government's efficiency push as a positive, positioning Intuitive Machines to capture work through its agile commercial model. He reiterated that the moon remains the primary strategic interest over Mars. Regarding funding, he stated that the company's key programs like CLPS, NSNS, and LTV are currently funded and would be covered under a continuing resolution.

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Executive Chairman and CEO John Plant detailed a comprehensive mitigation strategy, estimating a gross tariff impact of ~$80 million but a net impact of less than $15 million in 2025, mostly due to timing lags. Regarding rare earths, he noted long-term supply for key materials like yttrium, stating the company is in 'good shape'.

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Executive Chairman and CEO John Plant described the IGT outlook as 'exceptional,' driven by massive electricity demand from data centers for processing and cooling. He noted that Howmet is expanding capacity at two sites to meet this demand, which will initially manifest as higher spares sales from increased utilization of the existing turbine fleet. Plant reiterated that Howmet holds over 50% market share in IGT turbine blades and that IGT margins are similar to those in aerospace.

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Executive Chairman and CEO John Plant described Howmet as being in a 'position of choice.' While the company actively evaluates M&A opportunities, from small tech tuck-ins to larger deals, it remains highly disciplined. Any potential acquisition is rigorously compared against the risk-adjusted, cash-on-cash returns of buying back its own stock, which management still views as a healthy and positive use of capital.

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CEO Cliff Pemble reported that shipping and manufacturing have been following a normal cadence with a mix of air and sea freight, describing it as "business as usual." On mitigation, he reiterated that all options are being considered but declined to provide specifics due to competitive sensitivity. For Aviation, Pemble acknowledged some impact from tariffs on materials sourced from outside the U.S. but noted it is more limited since most manufacturing for that segment occurs in the U.S.

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CEO Aengus Kelly confirmed that wide-body demand remains 'very strong' and 'unabated,' with high demand for 787s and A350s. He expects the 777X to be a highly capable aircraft that will dominate its market segment. He affirmed his belief that the industry is lobbying against tariffs. On the 737, he stated emphatically 'No,' it does not need a replacement. Instead, he argued the industry's focus should be on improving the reliability and durability of existing aircraft programs, not launching new ones.

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CEO Aengus Kelly revised his forecast, pushing the expected equilibrium to the end of the decade, around 2029-2030. He cited high lease extension rates and airlines buying older assets as evidence. He clarified that airlines are keeping planes longer out of necessity, not desire, as they prefer the operational simplicity of new, standardized fleets.

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Eric Mendelson, Co-President, noted that HEICO focuses on the number of aircraft in age cohorts rather than the average age and isn't concerned, as older aircraft continue to fly and newer ones are very expensive to maintain. He expects the SPS fire to be "quite disruptive" but has confidence in PCC's ability to recover quickly. Carlos Macau, EVP and CFO, stated that tariff risk is diffused due to a localized supply chain and that any potential 3-5% cost increase could be passed on to customers.

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Co-President Eric Mendelson anticipates a more pro-business regulatory environment but noted HEICO is already a preferred buyer with a busy pipeline. Co-President Victor Mendelson added that HEICO's appetite for acquisitions of all sizes, including large ones, remains unchanged and is driven by bottom-line returns. Eric Mendelson highlighted the success of the Wencor deal as proof of their ability to execute large transactions.

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Phebe Novakovic, Chairman and CEO, stated that G800 certification is expected in the first half of 2025, and the learnings from the G700 are advantageous for the G800. She mentioned that the company has worked out some 'consideration' with suppliers but noted it was not material. Regarding contract volatility, she advised reacting to 'implemented reality' rather than rumors.

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CEO Phebe Novakovic explained that the Combat Systems supply chain is more robust because it uses materials and components that have broader industrial applications, unlike the unique, one-of-a-kind inputs for Gulfstream jets and submarines. For the Marine segment, she pointed to issues with both smaller parts from single-source suppliers and large, highly complex components, noting the Navy has also reported on these challenges.

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Chairman, CEO & President Tom Gentile described the 787 as a 'good program' for Hexcel, with a significant shipset value between $1 million and $2 million. He viewed the facility expansion, which could enable production rates to increase from 7 to 12 per month, as a very encouraging development that would be 'great for Hexcel.'

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CFO Dan Satterfield explained that the strong earnings profile in Q3 reflected a lighter work scope mix with lower material content, which typically carries higher margins. He stated that the company does not provide platform-specific details on the call but could potentially follow up.

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CEO William Ballhaus stated that he does not currently see significant performance constraints from either the workforce or supply chain. Executive David Farnsworth added that supply chain lead times have not systemically elongated. Regarding cash flow, Farnsworth reiterated expectations for positive free cash flow for the full year, with a stronger second half, and affirmed the long-term goal for the business to be a consistent cash generator.

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CEO Rex Geveden explained that stopping the supply chain to let shipyards catch up is not feasible, as it would risk losing capabilities, so BWXT will continue producing at required levels. For SMRs, Geveden estimated potential content at around $100 million per GE BWRX-300 unit and tens of millions for TerraPower's Natrium, which can be used to scale the opportunity. CFO Robb LeMasters added that BWXT also has call options to provide fuel solutions and leverage its U.S. manufacturing sites for domestic SMR demand.

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CEO Mike Hartnett described the M&A market as active, particularly in A&D, but noted intense competition from private equity and that many attractive assets come with significant problems to solve. Regarding the naval supply chain, Hartnett said the company's current focus is on executing its existing large order book and that a previous offer to build a new plant to help was met with little interest.

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CEO Max Mitchell responded that he does not see a 'red line' for Crane regarding the strike's duration. He explained that the company's strong aftermarket business provides a natural hedge against OE production delays. He also noted that Crane is proactively managing inventory and its supply chain to support Boeing's eventual recovery without disruption, expressing confidence in their ability to manage the situation.

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The long-term plan is to pivot to growth, not get smaller, by focusing on its core IP-based businesses (actuation, engine controls, gearboxes) and closing the valuation gap with peers. Regarding the MAX, the company is working closely with Boeing's leadership to support quality improvements and is confident in the program's recovery.

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