Aftermarket Growth and Freighter Impact
Q: How will freighter decline affect aftermarket growth?
A: Despite a 15% decline in freight aftermarket due to a shift from full freighters to belly cargo in passenger aircraft, strong bookings in passenger and interior segments support a mid-teens percentage growth in the commercial aftermarket for the year. "

Defense Sales Growth Outlook
Q: What's driving the defense sales growth outlook?
A: Defense sales are expected to grow in the mid-teens percentage range this year, driven by broad strength across units, including Armtec's shipments on the 155-millimeter artillery program, with growth likely to continue for a couple of years. "

EBITDA Margin Outlook
Q: Why might EBITDA margins drop in the second half?
A: While pleased with higher EBITDA margins this quarter, the company remains conservative and acknowledges business can be lumpy; thus, guidance reflects potential fluctuations, but there are no concerning trends affecting margins. " " "

Boeing Production Expectations
Q: Did you reduce Boeing expectations, and how does Airbus factor in?
A: The outlook incorporates potential risk around Boeing's rate changes but maintains confidence in around 20% growth for commercial OEMs, with Airbus performing better and helping offset any Boeing shortfall. "

M&A Pipeline Outlook
Q: How active is the M&A pipeline currently?
A: The M&A pipeline is the busiest it has ever been, with many small to medium-sized opportunities; the company remains optimistic but selective, having announced two smaller, accretive deals recently. "

Aftermarket Growth Drivers
Q: What are the main drivers of aftermarket growth amid freight decline?
A: Strong growth in passenger and interior segments is offsetting freight softness, with bookings indicating continued strength, leading to overall aftermarket growth acceleration in the second half. " "

Capital Allocation Plans
Q: How will excess cash be deployed if no deals occur?
A: The company prioritizes investing in businesses and M&A; if no incremental deals arise, they will consider options like paying a special dividend or share buybacks, with a decision likely in Q4. "

Productivity Gains and Head Count
Q: How are productivity gains affecting margins?
A: Through automation and efficiency projects, head count is 15% below 2019 levels, contributing to improved margins, and the company continues to invest in productivity enhancements. " "

Supply Chain Status
Q: What's the current state of the supply chain?
A: Supply chain conditions are improving but not yet back to 2019 levels, with lingering issues in electronics, castings, and certain materials, though progress continues. "

Pricing Changes in Aftermarket
Q: Did pricing change significantly in the aftermarket recently?
A: Pricing remains consistent, aiming to stay slightly ahead of inflation; no appreciable changes occurred in the second quarter. "

Defense Guidance Conservatism
Q: Why is defense guidance conservative for the second half?
A: Due to lumpiness and unpredictability in defense orders, the company remains cautious despite strong first-half performance, expecting moderation in growth rates. "

Aftermarket by Region
Q: Any regional trends in aftermarket, especially China?
A: While specific regional data is limited, the highest growth rates are seen in China and Asia, benefiting the company indirectly through distributors and supporting booking strength. "

PMA SKU Business Impact
Q: What's the impact of PMA SKUs on the business?
A: PMA parts are not a significant impact; with around 500,000 part numbers, the company continues to be the largest creator of PMAs in their space, seeing opportunities to replace other suppliers. "

Capital Investment Focus
Q: Where is capital investment being focused?
A: Investments are directed toward productivity and automation projects, such as cobots and machining centers, reducing head count and cost footprint, leading to better margins. "

Boeing MAX Production Rates
Q: What production rate assumptions for the MAX are in your guidance?
A: Production rates vary by unit; estimates are around 38 aircraft per month, factoring in adjustments based on customer demand, with confidence in the overall guidance. "