Executive Summary

Q1 FY2025 delivered solid top-line/margin execution: net sales $910.3M (+6% YoY), operating margin 11.1% (+10 bps), and adjusted operating margin 11.8% (+50 bps). Adjusted EPS rose 16% YoY to $1.78; reported EPS was $1.64, including an $0.18 per-share out-of-period warranty expense in Commercial Aircraft .
Bookings were a standout at $1.3B (record in Space & Defense) with 12-month backlog steady at $2.5B, supporting visibility; Commercial Aircraft aftermarket strength offset Industrial softness tied to portfolio actions .
FY2025 outlook maintained at the company level: sales $3.7B (unchanged), adjusted operating margin 13.0% (unchanged), adjusted EPS $8.20 (unchanged). Reported operating margin nudged to 12.9% (from 13.0%) and reported EPS to $8.06 (from $8.20). Q2 FY2025 EPS guided to $1.75 ± $0.10 .
Cash flow was weak near-term (FCF -$165M) on working capital build and timing; management reiterated back-half FY2025 cash generation, raised the dividend 4% to $0.29, repurchased ~220k shares for just over $40M, and reported leverage at 2.4x—squarely within its 2–3x target .

What Went Well and What Went Wrong

What Went Well

Broad-based growth in Aerospace & Defense with record Space & Defense bookings; Military Aircraft +15% YoY to $213M on FLRAA ramp; Commercial Aircraft +14% YoY to $221M on strong aftermarket; backlog stable at $2.5B .
Adjusted operating margin expanded to 11.8% (+50 bps YoY), with segment-level adjusted margin progress; CEO: “delivered a great quarter with strong sales growth, impressive bookings and solid margin enhancement” .
Capital returns and balance sheet: dividend increased 4% to $0.29; ~220k shares repurchased for >$40M; leverage 2.4x—within 2–3x target range .

What Went Wrong

Free cash flow used ($165M) on working capital (receivables, inventories) and timing of collections/compensation; FCF conversion -286% for the quarter .
Industrial segment revenue fell 7% (partly from divestitures) and reported margin dipped 60 bps to 11.2% due to restructuring/other charges .
Commercial Aircraft reported margin 11.0% included an $8M out-of-period warranty expense (340 bps impact); underlying margin would have been 14.4% excluding this item .

Financial Results

Company financials (oldest → newest):

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$904.7	$917.3	$910.3
Operating Margin % (reported)	11.6%	9.1%	11.1%
Adjusted Operating Margin %	12.3%	12.5%	11.8%
Diluted EPS (reported)	$1.74	$1.33	$1.64
Adjusted Diluted EPS	$1.91	$2.16	$1.78
Free Cash Flow ($USD Millions)	$(1.9)	$109.4	$(165.1)
S&P Global Consensus Revenue	N/A (unavailable)*	N/A (unavailable)*	N/A (unavailable)*
S&P Global Consensus EPS	N/A (unavailable)*	N/A (unavailable)*	N/A (unavailable)*

*Values retrieved from S&P Global were unavailable at the time of request.

Segment revenue and margins (reported):

Segment	Q3 2024 Sales ($M)	Q3 2024 Margin	Q4 2024 Sales ($M)	Q4 2024 Margin	Q1 2025 Sales ($M)	Q1 2025 Margin
Space & Defense	258.4	12.6%	262.8	10.3%	247.8	11.5%
Military Aircraft	207.2	11.6%	215.6	11.8%	213.4	10.7%
Commercial Aircraft	189.4	12.9%	197.1	11.0%	220.9	11.0%
Industrial	249.8	9.8%	241.7	3.8%	228.2	11.2%

Note: Commercial Aircraft Q1 2025 margin would have been 14.4% excluding a 340 bps out-of-period warranty expense ($8M) .

KPIs and operating drivers:

KPI	Q3 2024	Q4 2024	Q1 2025
Bookings ($USD Billions)	N/A	N/A	$1.3
12-Month Backlog ($USD Billions)	$2.5	$2.5	$2.5
Capital Expenditures ($USD Millions)	$32.1	$46.4	$32.8
FCF Conversion (%)	N/A	156%	(286%)
Share Repurchases (shares/$)	N/A	N/A	~220k / >$40M
Net Leverage (x)	N/A	N/A	2.4x
Dividend per share	N/A	N/A	$0.29 (raised 4%)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	$3.7B	$3.7B	Maintained
Operating Margin (reported)	FY2025	13.0%	12.9%	Lowered (10 bps)
Adjusted Operating Margin	FY2025	13.0%	13.0%	Maintained
Diluted EPS (reported)	FY2025	$8.20	$8.06 (±$0.20)	Lowered
Adjusted Diluted EPS	FY2025	$8.20	$8.20	Maintained
FCF Conversion	FY2025	50–75%	50–75%	Maintained
Diluted EPS	Q2 FY2025	N/A	$1.75 ± $0.10	New
Segment Mix (Sales)	FY2025	Baseline mix	Commercial Aircraft +$20M; Military Aircraft +$10M; Industrial modest offset (company total unchanged)	Raised CA/Mil; Lowered Industrial (mix shift)
Dividend	Ongoing	$0.28 prior quarter	$0.29 (+4%)	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3–Q4 FY2024)	Current Period (Q1 FY2025)	Trend
Pricing & Simplification	Drove margin expansion; targets reiterated; adj. margin 12.3% in Q3; 12.5% in Q4 .	“Both pricing and simplification will drive our operating margin expansion this year” – CFO .	Stable positive; continuing as key lever .
Commercial Aircraft aftermarket	Q3: +6% sales; margin +190 bps . Q4: lower vs prior year due to one-offs .	Aftermarket strength drove +14% sales; segment margin hit by $8M warranty (11.0%, would be 14.4% ex-item). CFO: aftermarket was a significant driver .	Positive demand; near-term one-off headwind .
Military Aircraft/FLRAA ramp	Q3 +18% sales; margin +130 bps . Q4 +17% sales; margin +590 bps .	+15% sales; margin 10.7% (mix offset); FY25 segment sales raised +$10M vs prior guide .	Continuing growth; guide nudged up .
Space & Defense demand	Q3 +7% sales; margin +490 bps; backlog +7% to $2.5B . Q4 +9% sales .	Record orders; bookings $1.3B; margin +50 bps YoY to 11.5% .	Robust bookings; sustained demand .
Industrial softness/portfolio shaping	Q3 -1% sales; higher charges . Q4 -5% sales; charges weighed on margin .	-7% sales (half from divestitures); restructuring/other charges; adjusted margin +60 bps to 13.2% .	Mixed: top-line soft, margins improving ex-charges .
Free cash flow cadence	Q3 FCF ~flat; guidance for FY improvement .	Q1 FCF use $(165)M on WC; reiterated back-half FCF inflection .	Near-term pressure; H2 recovery expected .

Management Commentary

CEO Pat Roche: “We have delivered a great quarter with strong sales growth, impressive bookings and solid margin enhancement. Our operational initiatives will deliver continued margin enhancement and strong free cash flow in the second half of 2025.” .
CFO Jennifer Walter (FY25 outlook): “Both pricing and simplification will drive our operating margin expansion this year, while our focus on optimizing our planning and sourcing activities will contribute to our significant cash generation in the back half of the year.” .
Capital allocation (call): “We repurchased roughly 220,000 shares… spending just over $40 million… we’re increasing our quarterly dividend by 4% to $0.29 per share… leverage ratio was 2.4 times at the end of the first quarter” .

Q&A Highlights

Aftermarket strength sustainability: Management highlighted aftermarket as a significant driver of Commercial Aircraft performance in Q1 .
Segment guidance shifts: Company-level FY25 guide unchanged, but mix raised in Commercial Aircraft (+$20M) and Military Aircraft (+$10M) with an offset in Industrial .
Cash flow timing: Capex phasing and working capital timing drove Q1 use; management reiterated stronger free cash flow in H2 FY25 .
Industrial/medical device market: Management indicated share gains are sticky and could persist 6–9 months amid competitor issues (Q&A) .

Estimates Context

S&P Global consensus estimates for Q1 FY2025 revenue and EPS and the prior two quarters were unavailable at the time of request due to data access limits. As a result, we have not presented “vs. consensus” comparisons for this recap. Values retrieved from S&P Global.
Given the unchanged company-level FY2025 outlook (adjusted metrics) and Q1 segment outperformance in Commercial Aircraft aftermarket, we would expect modest upward revisions to segment sales mix assumptions (Commercial and Military) and limited changes to full-year adjusted EPS absent further one-offs .

Key Takeaways for Investors

Mix matters: Strong aftermarket in Commercial Aircraft and FLRAA ramp in Military Aircraft are offsetting Industrial softness; segment guide raised for CA/Mil while total FY25 stays at $3.7B .
One-off warranty obscures underlying CA margin: Reported 11.0% includes a 340 bps out-of-period warranty; underlying would be ~14.4%, implying margin quality is better than GAAP suggests this quarter .
Backlog/Bookings support visibility: Record $1.3B bookings and steady $2.5B 12-month backlog underpin FY25/26 revenue trajectory, particularly in Space & Defense .
Cash flow is a timing story: Q1 FCF headwinds from working capital should reverse; management still targets 50–75% FCF conversion for FY25 with back-half weighting—watch inventories/receivables and capex cadence next quarter .
Capital returns/Balance sheet supportive: Dividend raised to $0.29; buybacks >$40M; leverage 2.4x within target range allows continued balanced capital allocation .
FY25 margin blueprint unchanged: Adjusted operating margin guide 13.0% maintained; execution hinges on pricing/simplification and supply chain/planning optimization .
Near-term trading: Limited change to company-level FY25 guide with positive segment mix shift; potential for sentiment support as investors look through Q1 FCF/warranty noise toward H2 cash and underlying CA margins .

Sources: Q1 FY2025 earnings press release and 8-K exhibits, dividend press release, Q4 and Q3 FY2024 press releases, and Q1 FY2025 earnings call transcript.

Q1 FY2025 press release:
8-K with EX-99.1/EX-99.2:
Dividend PR (Jan 24, 2025):
Q4 FY2024 PR:
Q3 FY2024 PR:
Q1 FY2025 earnings call transcript (company PDF):
Yahoo/GuruFocus call highlights (for Q&A reference):

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