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CEO Russell Ford stated the exchange program fits within existing capacity and yields normal CFM56 margins, enhanced by USM and in-house repairs. Chief Strategy Officer Alex Trapp added this model is used on other mature platforms. Regarding MTU, Ford viewed the added industry capacity as a positive ('goodness') that validates market demand and does not threaten their LEAP target.

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CEO Russell Ford stated that the MRO business has a delayed or dampened response to changes in flight operations, as maintenance is driven by previously accrued flight hours, providing confidence in the 2025 plan. CFO Dan Satterfield confirmed that the portion of business under long-term agreements remains stable at approximately 77%, ensuring strong future visibility.

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CEO Russell Ford clarified that the LEAP program's revenue contribution is currently minimal as it is in the early industrialization phase, though he noted the demand pipeline is filling up faster than expected. He affirmed that the company has planned appropriate capacity for both test cells and assembly to meet demand through the end of the decade.

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Executive Co-Chairman Brett Milgrim confirmed the L&B acquisition is awaiting French regulatory approval, likely post-August, and noted Beadlight's significant 2026 earnings potential. Founder, CEO & Executive Co-Chairman Dirksen Charles clarified that the 2025 guidance uplift is organic, with Beadlight adding only ~$2M in sales this year but poised for major accretion. Director of Investor Relations Ian Mckillop stated that engines constitute about 7% of revenue and grew in line with the broader aftermarket.

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Director of Investor Relations Ian McKillop attributed the strong Q1 defense growth to the 'lumpy' nature of the business and described the full-year guidance as conservative. CEO Dirkson Charles addressed the OE business, stating their guide conservatively assumes Boeing MAX production around 24/month, though current rates are higher. He noted Airbus rates have been consistent with their guide in the mid-30s per month.

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CEO Dirkson Charles confirmed strong aftermarket bookings and backlog, noting the primary challenge is keeping up with demand. Regarding profitability, he explained that while the Applied Avionics acquisition is accretive, the 120 basis point margin improvement is also driven by achieving price increases over cost inflation, operating leverage, and other internal productivity initiatives, with the full effect expected to be visible in the second half of 2025.

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Executive VP & CFO Yaacov Kagan reiterated internal targets of mid-teens growth for 2025 and double-digit growth for 2026, supported by a strong backlog. He noted the Land segment's exceptional 45% growth is driven by high demand for ammunition, Iron Fist, and the Sigma howitzer. Regarding ESA, Kagan confirmed the turnaround is progressing, with the final losing maritime contract set to conclude in Q3, which will enable further margin expansion.

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CEO Eric DeMarco revealed that the Poseidon win was highly competitive and that Kratos's vertical integration was a key differentiator. To track progress, he advised monitoring the obligation of funds from the recent reconciliation bill for hypersonics and drones, and following public updates from partner Northrop Grumman on the Sentinel ICBM program.

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CEO Eric DeMarco stated that the Thanatos program has a number of flights scheduled through year-end, with hopes for a follow-on contract in 2026 if successful. He described DOGE as a 'huge win' for Kratos, as budget reallocations from services to hardware are directly benefiting the company, with some related contracts already received. This positive impact is reflected in their strong bookings and outlook.

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CEO Eric DeMarco detailed Kratos's deep legacy in hypersonics, noting their current sweet spot is in target and test vehicles, with a potential future expansion into tactical systems. For micro-electronics, he projected 15-20% annual growth for the foreseeable future, driven by inventory replenishment and new capacity in India to support regional allies, which he sees as the next major growth driver for that business.

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CEO Cary Smith and CFO Matt Ophelis projected 18% organic growth (ex-confidential contract) for the second half, driven by the ramp-up of already-won contracts across both segments. Ms. Smith attributed the strong Critical Infrastructure margins, which are at a record 10.5%, to excellent program execution and high demand, stating that double-digit margins are the long-term expectation for the segment.

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CEO Carey Smith attributed the expected H2 ramp to the strong backlog in both Critical Infrastructure and Federal Solutions, particularly in cyber, plus the conversion of $12 billion in awarded-not-booked contracts. CFO Matt Ofilos explained the FS margin dip was due to lower volume on the high-margin confidential contract and a mix shift to more cost-type work. He reaffirmed the full-year FS margin target of approximately 9.5%, expecting a ramp as the mix stabilizes.

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CEO Carey Smith confirmed the guidance includes the negotiated value for the confidential contract's option year and that the variance in the growth outlook is primarily due to this program peaking, which was anticipated. She explained that the decrease in 'awarded not booked' backlog is a positive indicator, reflecting the successful conversion of these opportunities into funded, booked backlog, which is the strategic goal.

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CEO Carey Smith noted that the $13 billion awarded-not-booked pipeline is stable due to the timing of large contract bookings and pointed to the $8.8 billion backlog and 66% funded backlog as strong indicators for future growth, anticipating mid-single digits or better. CFO Matt Ofilos explained the CI segment's underlying margin is in the 9-10% range, with a long-term goal of double digits, expecting a gradual improvement of 40-60 basis points per year for the segment as legacy programs conclude.

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Co-COO Mike Lisman confirmed the OE destocking was across both narrow and wide-body platforms due to lower-than-expected OEM production rates and should be transitory, with growth returning in Q4. He added that freight aftermarket grew in the double digits, while interiors growth was even stronger due to increased airline refurbishment activity.

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Co-COO Mike Lisman attributed the conservative margin outlook mainly to conservatism and a second-half mix shift towards lower-margin commercial OEM sales, adding he hopes the forecast proves conservative. He also noted that all four commercial aftermarket submarkets were up nicely, with the engine segment being a "strong outperformer," and expects continued growth across all four.

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CEO Kevin Stein stated the new OEM contract's impact is already factored into the forecast. Co-COO Joel Reiss explained the interiors recovery depends on when airlines begin major refurbishment programs. Kevin Stein added that a lack of new plane deliveries from OEMs makes it difficult for airlines to take existing planes out of service for interior work.

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Co-COO Mike Lisman explained that the guidance is based on a bottoms-up process. He anticipates a return to growth for the freight and biz jet submarkets in fiscal 2025. He noted that passenger aftermarket grew nearly 20% in fiscal 2024 and will decelerate but remain positive in 2025. He also expects good growth in the interiors market as airline refurbishment activities resume.

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CEO Thomas Bell highlighted record volumes in medical disability exams, reaching 5,000 cases per day, and noted investments in mobile clinics for rural health. CFO Chris Cage added that the DHMSM contract was successfully extended and that the company is positioned for a potential consolidation of DoD and VA EHR systems. He also mentioned a pipeline of new opportunities like the Global Nurse Advice Line.

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CEO Tom Bell highlighted managed health services as a key growth pillar, citing rising veteran exam volumes. CFO Chris Cage added that while not directly in their control, they could expand their role over time. He affirmed that the company is capable of sustaining the Q1 performance run rate, as the VA wants to maintain high activity levels.

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CEO Thomas Bell expressed confidence in meeting financial expectations for the program despite a new entrant, citing Leidos's scale and technology. He also noted that the North Star 2030 strategy diversifies growth beyond this single contract. CFO Chris Cage added that demand remains robust and Leidos is positioned to deliver quality and capacity.

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CEO Thomas Bell expressed high confidence, stating that the "fog of war has been lifted." He confirmed the customer exercised the current contract's option year and a new two-year contract award is expected in weeks. He believes the subsequent long-term competition will favor Leidos's innovation. CFO Chris Cage added that Q3's strong results were partly due to performance incentives and noted a potential three-year extension on the DHMSM program is another positive indicator for the business.

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Executive Chairman and CEO John Plant detailed the timeline for new capacity. A Michigan plant is expected to have saleable output in Q4 2025, benefiting turbine airfoils. Two other projects for the IGT market (a new plant in Japan and an expansion in Europe) will see output in 2026, ramping to full capacity in 2027. Plant expects the initial cost drag from hiring and training to be offset by volume leverage, with profitability improving in late 2026 and 2027 as launch costs fade and scrap rates decrease.

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Executive Chairman and CEO John Plant explained the cautious guidance is due to several factors: the margin-dampening effect of dollar-for-dollar tariff pass-throughs, an expected production slowdown in the Commercial Truck business, and the costs associated with hiring and training approximately 1,000 new employees for growth projects.

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Executive Chairman and CEO John Plant characterized the Q4 engine margin dip as 'de minimis' noise, attributing it to temporary costs associated with the LEAP-1A engine changeover, which are now resolved. Looking at year-over-year margin improvement for 2025, he expressed the most optimism for the Engineered Structures segment, which he believes will show the largest percentage improvement.

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Joseph Adams, Chairman, CEO & Director, explained that margin expansion is multifaceted, driven by new in-house repairs, cost savings from acquisitions like Pacific Aerodynamic, new serviceable material, and most significantly, the upcoming PMA parts. He noted that the Pacific Aerodynamic acquisition could have a one-year payback period due to FTAI's ability to direct significant volume to the facility, making vertical integration highly accretive.

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CEO Joseph Adams stated that tariffs are not expected to have a material negative effect due to the rebuild-nature of the business, geographic diversification of facilities, and the ability to pass on price increases. He clarified that FTAI plans to invest approximately $200 million in parts inventory in the first half of the year, viewing it as a crucial step to avoid missing sales while production ramps. This investment is already factored into the company's free cash flow guidance.

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CEO Joe Adams detailed four margin components: standard repair work, unique green time optimization, a multi-faceted parts strategy (USM, LLPs, PMA), and high-value 'white glove' services. He affirmed these are sustainable and expects green time and parts contributions to grow, with PMA potentially adding 5-10 percentage points to margins. COO David Moreno then elaborated on the green time optimization process, using an example from the investor deck to show how FTAI creates significant value by disassembling engines and building rightsized modules, turning a $10 million investment into $16 million of value.

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CEO Joe Adams stated that FTAI's value proposition of cost and time savings creates a sticky customer base, with no evidence of reversion to old maintenance methods. He highlighted the FTAI Canada acquisition as key to scaling module production to 100 per quarter in 2025 to meet demand. COO David Moreno added that Q3 was a record for new customers (19), who typically start with 1-2 modules, while repeat customers order 5-10 modules and provide long-term shop visit schedules.

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President & CEO Kelly Ortberg stated that recent trade deals, like the one with Japan, are helpful for reducing input tariff costs, and the company aims to beat its previously stated sub-$500 million impact. He noted the order environment is very strong, and the constrained supply environment supports pricing. Ortberg also highlighted remaining trade risks related to China and the USMCA agreement.

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CEO Robert Ortberg affirmed that strong demand supports the existing rate increase plans, with the 737 moving to 42, 47, and 52 per month in increments of about six months, contingent on KPI stability. He noted 787 KPIs are green for the next rate increase. CFO Brian West added that inventory levels and supplier alignment are sufficient to support these ramps.

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CEO Kelly Ortberg explained that 'active management' involves working with customers like the U.S. Air Force on MOAs to derisk programs, though these are in early stages. CFO Brian West specified that about one-third of the new $1.7B charge will impact cash flow over the next three years. He projected 2025 BDS cash flow to resemble 2023's and suggested cash flow breakeven for the segment could be possible in 2026 or 2027.

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EVP and CFO Brian West attributed the better-than-expected Q3 free cash flow to the timing of BCA customer advances. He projected a Q4 cash outflow similar to Q2's, driven by inventory builds from production delays. For 2025, he anticipates a significant cash use, though an improvement over 2024, with a negative first half turning positive in the second half as production stabilizes.

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CFO Bill Lacey confirmed the investment would be a 'couple of hundred million' dollars, primarily spread across fiscal years 2026 and 2027, and that the company expects good returns. Regarding defense, he stated that demand for the entire Smart Defense portfolio is strong and that they feel good about this demand continuing through at least the first half of fiscal 2026.

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CFO William Lacey quantified the potential tariff pressure at $10-$15 million for the fiscal year, which is incorporated into the guidance. CEO Charles Blankenship attributed the 52% defense OE growth primarily to Smart Defense programs and explained the aftermarket decline was due to lumpy customer order timing.

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CEO Charles Blankenship attributed the strong aftermarket start to an easier year-over-year comparison, improved operational turn times from lean initiatives, and pricing. He noted Woodward's aftermarket is more correlated to engine flight hours than shop visits. CFO William Lacey added that core Industrial margins of 15% were aided by favorable foreign exchange rates, with the full-year guide remaining 14% to 15%.

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CEO Charles Blankenship expects commercial aftermarket to level off at a high plateau due to MRO capacity constraints. CFO William Lacey attributed the Q4 defense surge to overcoming supply chain issues and strong demand. Blankenship explained the divestiture was a strategic move to exit a build-to-print product line that lacked Woodward's own intellectual property.

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CEO Tom Gentile attributed margin pressure primarily to a lack of operating leverage from underutilized capacity compared to 2019, rather than price declines. He identified the A350 program as having the most significant operating leverage potential due to prior investments and current low production rates.

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Chairman, CEO and President Tom Gentile explained that the tariff figure represents the direct impact, which Hexcel believes it can offset with productivity improvements. It was excluded from guidance due to the high uncertainty surrounding indirect effects on the supply chain and potential OEM production rate changes. Gentile attributed the weak Q1 margin to lower-than-expected revenue, which prevented the company from achieving expected operating leverage given its existing capacity is built for higher production volumes.

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CEO Tom Gentile reiterated a conservative Q4 assumption for the MAX pending the strike outcome and stated 2025 rates depend on Boeing's updated schedule. He confirmed that Hexcel's labor is highly fungible across programs because they produce base materials like carbon fiber prepreg, not program-specific finished parts.

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SVP & CFO Mike Stepniak described the aftermarket growth as normalizing to a more sustainable rate, which he considers the new go-forward expectation. He attributed the OE destocking primarily to North American platforms where customers are depleting previously built-up safety stock, expecting normalization in Q3 and a return to normal in Q4. VP of Investor Relations Sean Meakim added a nuance about differing supply chain statuses between electromechanical and electronic components.

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SVP & CFO Mike Stepniak described the aftermarket growth as normalizing to a more sustainable rate for the second half. He explained the OE destocking was predominantly related to North American platforms where OEMs, now with better visibility, are depleting safety stock inventories built up previously. He expects this to normalize in Q3 and be back to normal in Q4. VP of Investor Relations Sean Meakim added that electronic solutions were caught up while electromechanicals still faced challenges.

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CFO Mike Stepniak explained that strong aftermarket growth is supported by a large backlog and capacity to ship, with pricing in line with prior guidance. He noted that while flight hours have moderated, business aviation and defense aftermarket remain strong. He added that commercial OE performance will normalize in the second half of the year.

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Incoming CFO Mike Stepniak stated that the aftermarket growth profile would be similar to the prior year, with some deceleration as flight hours stabilize. He noted that due to a higher OE backlog, original equipment sales are expected to outpace aftermarket growth. CEO Vimal Kapur added that the Bombardier agreement is a long-term win with revenue expected in 4-5 years, and that R&D and M&A investments in Aerospace will continue.

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CEO Vimal Kapur explained the Q3-to-Q4 margin change is due to business mix; discrete manufacturing disruptions in Q3 reduced lower-margin OE shipments, which artificially boosted the Q3 margin. As these shipments recover in Q4, the margin will normalize. CFO Gregory Lewis added that Boeing's demand has not changed meaningfully, and confirmed Q4 aftermarket strength will continue to be led by ATR growth. VP of Corporate Finance Sean Meakim emphasized the full-year margin outlook is unchanged, with the difference being timing between quarters.

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Scott C. Donnelly, Chairman, CEO & President, responded that Textron has not seen a dramatic impact from tariffs, citing its large North American base. He clarified the warranty cost was a reserve true-up. Regarding Bell, he attributed the lower margin to higher R&D and a revenue mix skewed towards the lower-margin MV75 EMD program, expecting full-year margins to be at the lower end of the guided range.

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Chairman and CEO Scott Donnelly explained that Bell's growth was driven by strong commercial deliveries and a significant increase in the FLRAA program activity. He expects FLRAA revenue to grow around 20% year-over-year. Regarding the Industrial segment, Donnelly noted the sale of the powersports business would cause a 'de minimis' reduction in revenue but could move the segment's profit margin toward the upper end of the guided range.

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Scott Donnelly, Textron's Chairman and CEO, explained that deliveries will ramp up through 2025 as the factory recovers from the strike and expands capacity. He noted that Q1 deliveries will include aircraft priced at 2024 levels. Donnelly characterized the Q4 Aviation margin of 7.8% as an anomaly caused by low volume and unburdened overhead from the strike, projecting that margins will progress from below the annual guide early in the year to above it by year-end.

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CEO Scott Donnelly confirmed ongoing softness and production cuts in the Industrial segment. For Aviation, he clarified that delayed sales are pushed into 2025, expecting revenue to surpass the original 2024 guide. He noted the new labor contract cost was largely anticipated and will be managed through productivity improvements, viewing it as a positive for workforce stability.

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CFO Evan Scott stated that the company fundamentally disagrees with the IRS's position on the tax matter, has appealed, and the $100 million P&L charge is for potential interest. Regarding the 2026 cash flow outlook of ~$6 billion, he cited cash usage from classified programs, benefits from new tax legislation, and an assumed $1 billion pension contribution as key factors. CEO James Taiclet added he is 'incredibly confident' the tax issue will be adjudicated fairly.

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CFO Jesus Malave identified Missiles and Fire Control (MFC) as the primary growth driver, projecting a high-single-digit growth rate for the segment. He stated that achieving mid-single-digit growth for the consolidated company depends on accelerating the conversion of the existing backlog, similar to the improvement seen in 2024, and on the performance of key new awards and classified programs.

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Chair, CEO & President Kathy Warden stated that Defense Systems is likely to have the company's highest sustained growth rate, fueled by tactical weapons, second-sourcing opportunities, and hypersonics. Regarding Sentinel, she explained that agreements reached with the customer on the program's restructure and path forward increased confidence in realizing incentives, leading to the positive margin adjustment. While not giving future guidance, she noted the drivers for the improved DS margin outlook are fundamental, not one-time items.

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CEO Kathy Warden stated the company does not see a significant risk from tariffs, as only about 5% of its supply chain is sourced directly from overseas. CFO Ken Crews explained the MS margin was impacted by known long-term investments, and improvement will be driven by a ramp on mature programs and efficiency gains.

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CFO Ken Crews clarified that the Space segment's remaining portfolio grew at mid-single digits in 2024 and is expected to return to growth towards the end of 2025, driven by strategic communications, restricted space, and propulsion systems. He also stated that Space segment margins are expected to expand in 2025 to the high 10% range, driven by performance improvements and efficiency initiatives.

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Chair, CEO and President Kathy Warden highlighted the company's 5% compound annual growth rate since 2019 and positioned the 2025 guidance of 3-4% as a balanced starting point. She noted that easing supply chain challenges, new contract wins, and continued strength in international orders could provide upward pressure on that rate. Warden affirmed her belief that mid-single-digit growth remains an achievable long-term target.

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Christopher Calio, Chairman & CEO, highlighted strong performance, including a 22% year-over-year increase in GTF MRO output in Q2, which is key to reducing aircraft on ground (AOG) numbers. He also confirmed continued strength in the V2500 program. CFO Neil Mitchill acknowledged that while aftermarket sales are now expected to be up mid-teens for the year, the year-over-year comparisons become more difficult in the second half.

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CFO Neil Mitchill clarified that the $850 million is an approximation, net of mitigations. He detailed that the impact on Raytheon would be minimal, with the remainder split fairly evenly between Collins and Pratt & Whitney, at slightly over $400 million each. He expects the earnings impact to be back-half loaded, with a slightly larger cash flow impact due to timing lags on duty drawbacks.

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CFO Neil Mitchill attributed the strong 2024 OE growth to a favorable engine mix and robust demand for priced spare engines. For 2025, he anticipates the majority of Pratt's profit growth will come from the aftermarket, which will be partially offset by a $150 million to $200 million headwind from negative engine margins on higher OE volumes.

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Executive Neil Mitchill confirmed the Collins OE outlook was recalibrated due to lower narrow-body volumes and strike impacts, though some shipments are expected to resume in Q4. He also cited mix headwinds from higher, less profitable 787 volume. On the aftermarket side, he stated that strong demand for parts and repair continues, supported by low aircraft retirement rates, and he expects this strength to persist into the next year.

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President Glen Hauenstein attributed the Main Cabin weakness to off-peak periods and noted that Delta and the industry are addressing this by cutting capacity on off-peak days and times. He expressed optimism it could turn positive or neutral by Q3 or Q4. For the Transatlantic, he noted lower travel volume from Europe is partially offset by favorable currency changes, and that demand is shifting from peak summer to the more pleasant shoulder seasons.

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President Glen Hauenstein identified off-peak flying as the primary source of Main Cabin weakness and explained that capacity cuts in these areas should drive improvement. He expressed confidence that Main Cabin revenue could turn positive by Q3 or Q4. For the Transatlantic, he noted that a demand shift from peak summer to shoulder seasons is the key trend, with currency changes offsetting lower European point-of-sale volume.

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President Glen Hauenstein and CEO Ed Bastian explained the flat corporate demand resulted from mixed performance, with sectors like auto down while banking and tech were up. Bastian noted that in uncertain times, companies minimize travel, but it encouragingly hasn't turned negative. CFO Dan Janki added that with flat capacity, net aircraft additions are already being reduced and retirements will be at or above the high end of their target range.

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CFO Dan Janki stated that aircraft retirements are expected to increase to approximately 30 in 2025, up from over 20 in 2024. He noted that about 12-13 of the year's ~40 deliveries will be widebodies. He indicated that maintenance spend should see year-over-year improvement as it normalizes, though the full process will span multiple years.

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President Glen Hauenstein suggested that the trend is driven by both main cabin underperformance, which should improve with industry capacity cuts, and continued growth opportunities in premium products. He noted the overall backdrop is constructive for both cabins, driven by business travel recovery and better supply-demand balance.

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Co-CEO Eric Mendelson detailed the strong organic growth across FSG subsegments, including 16% in parts and distribution. EVP & CFO Carlos Macau clarified that the significant margin lift was largely attributable to a favorable product mix driven by the high-performing defense business within specialty products.

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Victor Mendelson, Co-President, stated he is comfortable with the Electronic Technologies Group's EBITA margin in the 26-28% range. Eric Mendelson, Co-President, explained the Flight Support Group's 27% EBITDA margin was achieved through efficiency and cost control, not aggressive pricing. He also highlighted new avionics acquisitions, like Millennium International and Honeywell product lines, as key growth areas.

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Co-President Eric Mendelson projected strong double-digit organic growth to continue across all three FSG segments (parts, repair, specialty products) in fiscal 2025. He pointed to the significant organic growth in Q4 as evidence of Wencor synergies. Regarding the commercial PMA process, he stated that the FAA has always been "outstanding to work with" and he expects no change.

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CFO Carlos Macau confirmed the impairment and contingent liability changes were two separate items in ETG that largely netted out. He and Eric Mendelson clarified that ETG's cash margin actually improved year-over-year. Victor Mendelson stated ETG's defense business saw double-digit growth. Eric Mendelson explained that while they can present a combined portfolio, the core strategy remains having individual business units engage directly with airlines to leverage their deep product expertise.

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CFO Eduardo Couto explained that the order book is stable, with the focus shifting from new LOIs to deepening engagement with existing customers to develop ecosystems and firm up orders. He also clarified that the Q1 cash burn was artificially low due to a payment timing shift, and the full-year burn is expected to be near the low end of the $200M-$250M guidance, with liquidity sufficient through 2026.

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CEO Johann Bordais corrected that the timeline shift to 2027 is up to a 12-month adjustment, not 1.5 years. He explained that the growth in the services backlog reflects Eve's core strategy of selling a complete ecosystem solution, not just an aircraft. The recently launched 'TechCare' platform formalizes this offering, which customers value for ensuring operational readiness and reliability.

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Chief Operating Officer Andrew Watterson reported that Expedia has ramped up faster than expected, representing 4-5% of recent bookings and attracting new customers, particularly in markets where Southwest is less established. He and CEO Bob Jordan explained that initiatives are targeted: yield-driving tools like the new revenue management system are for peak periods, while load-driving tactics like Basic Economy and network connectivity are for off-peak periods, thus avoiding a direct trade-off.

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CFO Jeff MacLauchlan noted a slight, manageable slowdown in administrative tasks but minimal business disruption. CEO John Mengucci added that CACI's resilient strategy mitigates these risks. On Azure, Mengucci stated the integration is going 'very, very well,' with the combined teams accelerating the deployment of next-gen capabilities for the Navy. MacLauchlan also noted the integration yielded CapEx efficiencies, contributing to the raised free cash flow guidance.

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CFO Jeffrey MacLauchlan attributed the strong second-half margin profile to historical customer buying patterns. CEO John Mengucci added that the long-term focus is on free cash flow per share, not just margin. He reported that the Spectral program is progressing well, with the recent Azure acquisition accelerating delivery timelines and securing a significant $319 million follow-on award.

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EVP and CCO Andrew Nocella confirmed a modest decline in foreign-origin business but noted it's easily offset by strong U.S. demand, with the Pacific, particularly Japan, showing phenomenal strength. EVP and CFO Mike Leskinen stated that in the $7-$9 EPS recession scenario, free cash flow would be near breakeven but still positive, with operating margins being a function of that math.

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EVP and CFO Mike Leskinen explained the conservative start to buybacks was due to the stock's steep price increase following the authorization announcement. He emphasized a balanced approach between improving the balance sheet and opportunistically repurchasing shares, noting they expect to reach their sub-2x net leverage target in 2025.

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EVP & CCO Andrew Nocella attributed the Q3 improvement to an acceleration in business traffic, which was up 13% in September. For Q1, he pointed to a 'much better pricing environment for leisure yields' early in the booking curve, driven by industry capacity changes and the elimination of unprofitable flying by competitors.

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CFO Blaine Browers stated that blended pricing was 1.5% to 2% in 2024 and is expected to be in a similar range for 2025, excluding any tariff impacts. President Brad Williams clarified that for European defense, the primary opportunity lies in their EOD product line rather than body armor. Regarding federal agencies, Blaine Browers noted they have not seen a meaningful impact from DOE personnel changes and do not see significant long-term risk, though temporary procurement disruptions are possible. Brad Williams added that government headcount often shifts between agencies, and they have not seen anything concerning on the demand side. Blaine Browers concluded that the company does not disclose exposure levels by specific agency.

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CFO Blaine Browers expressed confidence in the Q4 forecast, citing a strong inventory position and specific capacity-increasing measures like adding workdays. For 2025, he stated the outlook is consistent with historical growth trends (3% for core, 4-6% for nuclear) and that the main one-time impacts from 2024, like the $5 million Q3 margin pressure, are not expected to recur.

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President and CEO John Cuomo explained that the growth outlook is evenly split between its commercial and business aviation markets and is expected to be consistent throughout the year, not back-end loaded. He noted the guidance includes a cushion for potentially pruning some of Kellstrom's USM business. Cuomo attributed TCI's outperformance to successful capacity expansion and collaboration with OEM partners. For Kellstrom, he stated the primary focus is on synergy capture and margin improvement rather than aggressive revenue growth, though double-digit growth is still anticipated.

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CEO John Cuomo and CFO Adam Cohn clarified that the 13% organic growth in the Aviation segment excluded the TCI acquisition. John Cuomo attributed the strong performance to balanced growth across both MRO and distribution, driven by share of wallet gains and new program wins. Looking ahead to 2025, Cuomo expressed confidence in achieving double-digit organic growth, fueled by continued share gains that will offset a moderating, but stable, business and general aviation market.

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COO Nick Leontidis confirmed the full-year FFS delivery guidance of 'more than 50' remains intact. Interim CFO Constantino Malatesta added that the higher mix of product sales will result in the annual Civil margin being modestly below the 22-23% range. Regarding the GTF engine issues, Mr. Leontidis noted that while the situation is improving, as seen with customers like Indigo, the timeline for a full resolution is still uncertain.

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CEO Marc Parent explained the margin improvement is driven by a combination of factors, including cost savings from business simplification, rather than a single element. He expects margins to trend higher but did not confirm a new run rate. Both Parent and COO Nick Leontidis stated the industry is at the 'peak' of the A320 engine-related issues, which had slowed pilot hiring, but they now see the situation stabilizing and expect improvement.

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CFO Dave Farnsworth explained the record cash flow was boosted by a ~$40 million increase in deferred revenue from milestone payments, which represents a pull-forward of cash that will be worked off in the second half. He also reiterated that production margins are targeted to be roughly 1,000 basis points higher than development margins. CEO Bill Ballhaus highlighted two key competitive wins: a satellite program secured by the new Advanced Concepts group and a CPA-related takeaway from an entrenched competitor, both won on technical differentiation.

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CFO Mark Suchinski confirmed that previous assumptions included anticipated price increases from negotiations with Airbus, which were reversed. The forward loss also includes new orders and cost growth. Regarding cash use, he stated that Airbus programs account for 80-85% of the company's current forward loss liabilities on the balance sheet.

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