Financial Data and Key Metrics Changes - The company reported revenue of $869 million for Q3 2025, representing a 9% year-over-year increase, with 6% organic growth [5] - Operating income increased by 14% year-over-year, leading to an overall operating margin expansion of 90 basis points to 19.6% [5] - Diluted earnings per share (EPS) rose by 14% year-over-year, slightly exceeding expectations due to improved operational performance and fewer shares outstanding [5] - Free cash flow was $176 million, up 8% year-over-year, reflecting nearly 140% conversion due to higher cash earnings and lower tax payments [5] Business Line Data and Key Metrics Changes - In the Aerospace and Industrial segment, sales increased by 8%, driven by strong demand in commercial aerospace and modest growth in aerospace defense [10] - The Defense Electronics segment saw a 4% sales growth, primarily due to tactical communications equipment revenues [11] - The Naval and Power segment experienced a 12% increase in sales, driven by production acceleration on submarine programs [12] Market Data and Key Metrics Changes - The order book increased by 8%, resulting in a book-to-bill ratio of 1.1 times, indicating continued confidence in future top-line growth [5] - The backlog reached a record of over $3.9 billion, up 14% year-to-date [8] - Commercial nuclear orders saw tremendous growth, including new multi-year contracts funded by the DOE [6][8] Company Strategy and Development Direction - The company is focused on a "pivot to growth" strategy, emphasizing operational and commercial excellence while making targeted investments [4] - There is a strong alignment with U.S. defense priorities, particularly in shipbuilding and defense electronics, which are expected to benefit from increased global defense spending [24][25] - The company aims to capitalize on growth opportunities in commercial aerospace and nuclear markets, with expectations for significant revenue growth in the coming years [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning across A&D and commercial markets, anticipating meaningful growth opportunities well into the next decade [4] - The company raised its full-year 2025 guidance for sales, operating income, and EPS, reflecting strong year-to-date performance and a growing backlog [8][9] - Management acknowledged potential impacts from the government shutdown but indicated that the overall pipeline remains healthy and growing [37][43] Other Important Information - The company is maintaining its free cash flow guidance while increasing capital expenditures to support future growth initiatives [9][22] - Share repurchase activity has been accelerated, with expectations to exceed $450 million in repurchases for the year [32] Q&A Session Summary Question: Can you provide details on the AP1000 reactor content? - Management confirmed that the content per reactor coolant pump (RCP) is approximately $28 million, with additional content expected to increase significantly [35][36] Question: How did bookings perform by segment, particularly in defense electronics? - The company reported a book-to-bill ratio of 1.1 times, with defense electronics experiencing some order push-outs due to the government shutdown, but the overall pipeline remains strong [37][38] Question: What is the expected timeline for revenue recognition on the AP1000 orders? - Revenue recognition will depend on the timing of material receipts, with some revenue expected in 2026 and a quicker acceleration in 2027 [52][53]