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EVP and CFO Alan Edrick stated that while he couldn't provide quarterly guidance, he expects operating cash flow to be strong throughout fiscal 2026, in both the first and second halves. CEO A. J. Mera attributed the robust ex-Mexico growth to broad-based international demand in aviation and cargo, solid domestic performance, and a strong future pipeline fueled by both international markets and new US government funding for agencies like CBP.

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President & CEO Ajay Mehra confirmed the $1.1 billion is on top of the baseline budget and presents multi-year opportunities for equipment, integration, and AI solutions like their CertScan software. Executive President & CFO Alan Edrick noted a significant opportunity to improve working capital and free cash flow by reducing receivables over the next six months. He also disclosed that the RF acquisition contributed $29 million in revenue for the quarter.

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Chairman and CEO Russell Ford confirmed the second-half outlook remains strong, driven by the CF34 program. He explained that while new program ramps are dilutive, the company's overall margin still expanded by 80 basis points, indicating significant underlying strength in core programs. Ford noted that the new programs are on track to reach profitability late in the current year or early next year as losses narrow.

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CEO Russell Ford stated that engine MRO is non-discretionary and historically not impacted by short-term volatility in passenger traffic, as airlines cut other discretionary spending first. Chief Strategy Officer Alex Trapp added that the company has ample balance sheet capacity and free cash flow to pursue a robust pipeline of attractive M&A targets.

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CEO Russell Ford explained that robust growth is anticipated across several key platforms, with the CF34 and turboprop segments showing strong performance and the CFM56 expected to be the largest revenue growth driver in 2025. CFO Dan Satterfield added that while there will be an incremental working capital build to support growth, particularly for the LEAP and CFM56 programs, it is expected to remain around 25% of revenue going forward.

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CEO Russell Ford explained that the outlook for the CFM56 program is robust, justifying the Dallas-Fort Worth facility expansion. He views OEM investment in the LEAP MRO network as a positive indicator of long-term demand. CFO Dan Satterfield added that Q4 cash flow is expected to improve sequentially as significant one-time costs from the IPO and acquisitions will not recur.

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EVP & CFO David Farnsworth stated that while gross margins are expected to increase over the long term, quarterly fluctuations are possible. CEO William Ballhaus added that current OpEx levels are in the 'right ZIP code' for the near term, providing a solid foundation for future operating leverage as the company scales.

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CEO Will Ballhaus confirmed that the sequential revenue decline was influenced by a significant pull-forward of approximately $30 million from Q3 into Q2, driven by a focus on accelerating customer deliveries. He affirmed that this timing shift is consistent with their prior expectations and is the reason for the implied flat year-over-year revenue in Q4, with the full-year outlook remaining unchanged.

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CEO Bill Ballhaus defined the target market as the Tier 3 defense electronics market, which historically grows at 5-6%, and noted Mercury is focused on faster-growing subsegments like processing at the edge. He explained that the CPA contributes to growth by unlocking follow-on bookings, enabling new revenue-generating deliveries, and freeing up capacity to burn down unbilled receivables, which converts prior work into cash.

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Executive David Farnsworth clarified that while CPA is a significant contributor, no single program accounts for 10% of revenue, and he declined to provide a specific future mix percentage. Regarding SG&A, Farnsworth acknowledged historical cyclicality but stated the company expects operating leverage to improve through the second half of the year.

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CEO Eric DeMarco could not comment on the specific hypersonic mission driving KGS results, while CFO Deanna Lund confirmed the revenue guidance increase was primarily in KGS. Mr. DeMarco detailed the capital allocation strategy, which involves investing in new facilities for major program wins like Poseidon, Anaconda, and Helios, positioning the company for significant cash flow generation starting in the 2027-2028 timeframe.

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CEO Eric DeMarco explained that MACH-TB is an aerial test contract with a significant revenue ramp expected in 2026 and beyond, following initial work on long-lead items in 2025. CFO Deanna Lund clarified that while most 2025 facility investments are non-recurring, the Prometheus JV investment will be a major factor in 2026, along with the completion of the new turbojet facility.

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CEO Eric DeMarco described progress on Prometheus as being on the 'five yard line,' anticipating a major announcement soon and calling it a potential top catalyst for Kratos. He clarified that Prometheus is factored at 'zero' in the company's forecasts, representing pure upside. The primary destination for the high-volume turbine production, he explained, will be new, low-cost cruise missile programs that emphasize affordable mass.

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CFO Jeffrey MacLauchlan confirmed the expected growth acceleration, attributing it to the continued ramp-up of major programs like Focus Fox, Beagle, and ITAS, as well as the anniversary of recent acquisitions. Regarding NGC2, President and CEO John Mengucci acknowledged it as a highly competitive area and stated that CACI is evaluating its strategy but supports the Army's modernization goals.

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CEO John Mengucci explained that the software focus fosters supportive partnerships, not fractures, as CACI provides software for platforms built by hardware providers, citing examples in optical communications and the Spectral program. He stressed that software offers the speed and agility required to counter evolving threats. CFO Jeff MacLauchlan clarified that the difference in bookings was due to a program ending in early January and using less of its ceiling than anticipated, an event unrelated to the current environment.

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CEO John Mengucci expressed high confidence, citing CACI's deep mission understanding and software-defined approach as key differentiators against new entrants. CFO Jeffrey MacLauchlan clarified that the risk within the 6% civilian revenue varies, with work for agencies like NASA and the Department of Justice likely being more insulated from potential cuts.

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CEO Thomas Bell outlined billions in addressable markets, including $2-3 billion in non-intrusive inspection and border surveillance. He emphasized that Leidos has field-ready products that are resonating with the Department of Homeland Security. CFO Chris Cage specified that the integrated security, detection, and automation (SES) business, which includes ports and borders, is on the order of a $600 million business.

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CEO Thomas Bell stated that Leidos is aware of and often partners with new entrants. He emphasized that the company's growth pillars are intentionally focused on areas where Leidos has existing and accelerating differentiation. He expressed confidence in their ability to leverage these current capabilities to stay ahead of the pack.

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Executive Chairman and CEO John Plant highlighted two positive volume drivers for the F-35. First, the spares business for engine products has reached a tipping point, now exceeding OE production volume, a trend expected to continue as the fleet grows. Second, destocking in the structures business (bulkheads) has ended, with orders now matching Lockheed's production rate. Plant expressed optimism for solid F-35 production rates of 150 per year through the end of the decade.

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Executive Chairman and CEO John Plant acknowledged that while end-market travel demand is important for long-term planning ('26-'27), Howmet is protected for a significant period by high aircraft backlogs, the need for more fuel-efficient planes, and strength in defense and IGT. He noted the uncertainty is a reason to further strengthen the balance sheet.

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Executive Chairman and CEO John Plant reiterated his view that the Structures business could achieve high-teens margins and expects to sustain its recent performance into 2025. He stated that strong performance earns the business the right to receive more capital investment. While he does not see it reaching the intrinsic margin levels of the Engine business, he affirmed it is a valuable contributor to the portfolio and there are no concerns about its place.

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Executive Chairman and CEO John Plant confirmed that both factors are significant drivers. He noted that shop visit peaks for legacy engines like the CFM56 have been pushed out to 2026-2027. Concurrently, new engines are creating substantial demand due to time-on-wing issues and a long-term trend of more frequent maintenance, creating a dual tailwind for the spares business.

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President and CEO Christopher Kastner and EVP and CFO Thomas Stiehle confirmed they expect the awards in the second half of the year, and the guidance range already accounts for this timing. They noted the awards primarily affect cash flow and incentives this year, not margins. Kastner clarified that wage hikes are not immediately booked into estimates; the company must first see proven performance improvements.

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EVP and CFO Thomas Stiehle confirmed that the contract and its associated cash incentives were already factored into the Q2 and full-year free cash flow guidance. President and CEO Christopher Kastner described the Hyundai MOU as an early-stage, broad relationship to explore best practices, noting that collaboration with allies to expand capacity is logical but outcomes are not yet defined.

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President and CEO Christopher Kastner clarified that the guidance assumes the successful negotiation of the FY '24 two-boat contract, followed by the Block VI and Columbia build 2 contracts. He expressed high confidence in finalizing the FY '24 boats in the first half of the year, noting that while his interactions with the new administration are limited, he has been assured that shipbuilding is a top priority, which supports the expected progression to subsequent contract negotiations.

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CEO Christopher Kastner confirmed that outsourcing will increase and that the associated cost premium is being factored into future contract negotiations. CFO Thomas Stiehle affirmed the 3-4% growth target is still appropriate, describing the CapEx reduction as a prudent short-term measure that does not change the strong long-term demand profile and value equation for HII.

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President & CEO Kimberly Fields acknowledged ongoing airframe inventory destocking but noted signs of demand returning in the second half for specific alloys. She highlighted that new long-term agreements position ATI for growth as build rates accelerate. Regarding capacity, both Fields and EVP & CFO Don Newman confirmed ATI is well-positioned to meet 2027 targets, citing discrete debottlenecking investments and a new nickel melting project expected to add 8-10% capacity next year with modest capital expenditure.

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Kim Fields, President and CEO, attributed the jet engine growth to a mix of prior CapEx investments in downstream debottlenecking, improved upstream reliability, and productivity gains. Regarding widebodies, she noted demand is starting to build and highlighted that ATI's new titanium capacity in Oregon is coming online to support the ramp. She also announced a new 5-year, nearly $1 billion agreement with Airbus, positioning ATI as a leading flat-rolled supplier.

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President and CEO Kimberly Fields highlighted strong engine growth driven by MRO activity and the GTF program, with an expected 50% sales increase in 2025 for the latter. Executive Vice President and CFO Don Newman projected HPMC margins to start 2025 in the 20-21% range and ramp to over 23% later in the year, driven by higher volumes, better absorption, and favorable mix from jet engine demand.

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President and CEO Kim Fields identified the 787 program as a 'bright spot' with increasing demand forecasts for 2025, while noting the 777X delay was disappointing but not substantially built into near-term forecasts. EVP and CFO Don Newman agreed that any pause in the production ramp is an opportunity to accelerate efficiency and yield improvements, but emphasized this would not slow progress toward their 2025 margin targets of 18-20%.

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Chairman & CEO William Lynn highlighted the Columbia program as the core, with the South Carolina facility enhancing efficiency. He identified steam turbine generators as a key opportunity to help the Navy increase submarine throughput. EVP & CFO Michael Dippold added that the Columbia portion of the facility will come online in late 2026 and that the company expects to exit the year with a higher backlog, anticipating a book-to-bill ratio above 1.0 for the full year.

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CFO Michael Dippold explained that margin expansion is expected as quarterly revenue increases, creating greater operational leverage over fixed G&A costs. CEO William Lynn confirmed significant opportunities in shipbuilding, citing the Columbia-class program, Navy investment for second-sourcing steam turbines, and discussions to support Virginia-class submarine throughput, all leveraging the Charleston facility.

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CFO Mike Dippold attributed the Q4 margin strength to volume leverage and a favorable mix, particularly the Columbia program moving to higher-priced shipsets. He confirmed this is an ongoing mix change, not a one-time event, supporting the path to 14% margins. CEO Bill Lynn stated that while M&A is the highest priority, the company will also consider other methods of returning cash to shareholders.

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EVP & CFO Brian West stated that any margin impact from the certification delay is 'modest.' He reiterated that BCA margins are expected to be negative for the full year but should improve sequentially in each quarter of the second half. West added that while it's too early to characterize 2026, there is nothing to suggest the segment cannot return to historical margin levels long-term.

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CEO Robert Ortberg described the duty drawback process for exported aircraft and noted efforts to help suppliers benefit from it, prioritizing supply continuity. CFO Brian West quantified the net annual impact of input tariffs as manageable at less than $500 million, citing pre-tariff inventory and hedging. He added that the potential China delivery impact, while over $1 billion, was contemplated in the company's conservative annual plan.

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CFO Brian West explained that the shadow factories for the 787 and 737 are expected to close in early and mid-2025, respectively. While the costs are factored into the 2025 outlook, the primary financial benefit will be improved BCA margins in 2026 and beyond. He stated that the financial impact of the Spirit integration would not be detailed until the deal closes.

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President and CEO Kelly Ortberg acknowledged that while some defense contracts are tough, Boeing needs better discipline in risk management and execution on factors within its control. EVP and CFO Brian West clarified that achieving 'normal production rates' for the 737 means getting back on track to the pre-strike plan of 38 aircraft per month, after which the company will seek FAA approval for further increases.

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Scott C. Donnelly, Chairman, CEO & President, acknowledged the surprise program terminations at Systems but noted that growth in other areas like the ship-to-shore connector and Sentinel programs should offset the impact this year. For the Industrial segment, he expressed confidence in the current performance, citing successful restructuring post-powersports disposition, but was not ready to revise guidance upwards.

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Scott Donnelly, Chairman and CEO, explained that Bell's Q4 results were affected by unfavorable program adjustments, specifically the exercise of a lower-margin, fixed-price option on the FLRAA program. Regarding Aviation orders, he stated that the mix between fleet and retail customers is generally stable over the course of a year, though some quarter-to-quarter variability can occur based on the timing of orders and deliveries.

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CEO Scott Donnelly attributed the Q3 Aviation margin pressure to strike-related costs like idle facilities and lower volume against fixed overheads. For Bell, he stated the focus is on growing absolute profit dollars, with a strong commercial mix helping to offset the margin impact from the growing FLRAA program.

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Chair, CEO & President Kathy Warden indicated that depending on the final agreement for the B-21 production ramp, the program could exceed 10% of total company revenue in the future, but it was too early to be definitive. She stated that while Sentinel is not expected to reach that level in the next few years, it could be revisited in the production phase. She noted that any updates to the long-term cash flow outlook would be provided once the business arrangements, including company investments and returns, are finalized.

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CEO Kathy Warden stated that due to the program's classification, she could not quantify the split but confirmed the process change cost was larger than the material cost. She affirmed the change was made to reduce risk while scaling and to provide the government with optionality for future production rates.

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CEO Kathy Warden stated that while Northrop embraces new entrants and often partners with them, it does not change the core strategy of technology differentiation, though it sharpens investment focus. She also noted that international sales are expected to see double-digit growth in 2025 and that this trend could continue for multiple years, driven by a strong backlog and pipeline for products like IBCS, E-2D, and Triton.

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Chair, CEO and President Kathy Warden affirmed that demand is expected to be enduring for multiple years, driven by the need for the U.S. and its allies to replenish stockpiles donated to Ukraine. She confirmed Northrop Grumman is investing to triple its capacity and is confident that demand will support this expansion, though the company continues to monitor the market balance.

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Christopher Calio, Chairman & CEO, described FAA modernization as a critical, bipartisan priority and a significant opportunity for RTX. He noted the $12.5 billion in recent funding as a 'good down payment' and highlighted RTX's strong market share in installed radars and tower automation systems. He also pointed to opportunities for the Collins Aerospace business in aircraft equipage for ground control systems.

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CFO Neil Mitchill reported that Q1 order activity was strong and no major changes in customer behavior were seen in early April. He noted that while aftermarket demand remains robust, the company's guidance range is built to absorb some potential softening later in the year. CEO Christopher Calio added that RTX uses a bottoms-up analysis with airline customers to monitor buying patterns daily.

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CFO Neil Mitchill explained that as more recently delivered aircraft come off warranty, it creates a growing tailwind for the Collins aftermarket. He also noted the V2500 aftermarket remains robust. For Pratt & Whitney, he clarified that large commercial engine unit deliveries are expected to grow by about 14% in 2025, similar to the growth seen in 2024.

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Executive Neil Mitchill detailed the Q3 margin headwinds, including 200 basis points from lower OE volume and unfavorable mix, and 100 basis points from higher R&D and a $35 million contract headwind in the interiors business. He explained that the Q4 margin is expected to increase by about 130 basis points due to mitigation actions addressing the temporary OE slowdown and the non-recurrence of the Q3 interiors contract charge.

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President and CEO Kevin Stein noted the main change in the M&A environment is the willingness of others to pay "aggressive multiples," but TransDigm's disciplined approach remains unchanged. Regarding aftermarket risk, Stein stated that while they monitor headlines, their order book remains strong with no signs of a downturn, but they are prepared to react quickly on costs if conditions change.

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Co-COO Joel Reiss reiterated that the aftermarket is lumpy and they are maintaining their existing guidance despite the strong start. Regarding the hypothetical acquisition, CEO Kevin Stein stated that such a scenario has never occurred and is not their usual process, though they remain opportunistic in all dealings.

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CFO Jesus Malave stated that the risk on the program has been 'significantly reduced' due to a comprehensive review, a conservative cost reset, and enhanced monitoring processes. He noted that the 2025 outlook of 4-5% growth is an improvement from the prior baseline, reflecting realized opportunities and growing confidence in operational throughput, which will inform the outlook for 2026 and beyond.

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CEO Pat Shanahan explained that the production rate will remain steady at 31 aircraft per month, with the accumulated inventory serving as a 'surge capacity' buffer for Boeing's future rate increases. CFO Mark Suchinski added that Q2 cash deliveries will be consistent with Q1, with an increase in Q3 and Q4, aiming for a full-year average of approximately 31 per month.

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