Strategic Performance and Operational Context - Achieved 13% organic revenue growth in 2025, marking back-to-back years of double-digit expansion driven by tactical radars and naval propulsion [5] - Maintained a book-to-bill ratio of 1.2 or better for the fourth consecutive year, validating a platform-agnostic strategy across diverse defense domains [5] - Intentionally increased internal R&D by 40% to expand footprints in high-growth airborne, missile, and space markets while advancing platform autonomy [5] - Successfully contained germanium supply chain constraints through recycling initiatives, strategic customer allocations, and new North American and European sourcing [5] - Monetized non-core laser intellectual property via a $100 million license agreement to focus resources on core defense growth vectors [5] - Concluded a legacy foreign ground surveillance program that was no longer viable due to technology obsolescence, clearing the slate for future execution [5] 2026 Outlook and Strategic Priorities - Initiated 2026 revenue guidance of $3.85 billion to $3.95 billion, assuming 6% to 8% organic growth supported by an $8.7 billion backlog [5] - Projecting 70 to 90 basis points of adjusted EBITDA margin expansion driven by improved Columbia Class profitability and operating leverage [5] - Increasing capital expenditures to approximately 5% of revenue to complete the Charleston naval facility and expand tactical radar production capacity [5] - Anticipating sustained demand from fiscal 2026 Defense Appropriations and supplemental funding aligned with priority areas like Counter UAS and air defense [5] - Focusing on modular electric propulsion architectures to address the Navy's evolving requirements for next-generation surface combatants and unmanned vessels [5] Leadership Transition - Transitioned leadership to John Baylouny as CEO and Sally Wallace as COO, emphasizing operational speed and internal leadership continuity [7]

Financial Data and Key Metrics Changes - Full year 2025 revenue was $3.6 billion, representing 13% organic growth compared to 2024, marking back-to-back years of double-digit growth [20][21] - Adjusted EBITDA for the full year was $453 million, reflecting a year-over-year growth of 13% [23] - Free cash flow for 2025 increased by 19%, totaling $227 million [13][25] - Diluted EPS and Adjusted Diluted EPS increased by 29% and 24% year-over-year, respectively [24] Business Line Data and Key Metrics Changes - Advanced Sensing and Computing segment delivered revenue growth of 9% in Q4 and 11% for the full year [22] - Integrated Mission Systems segment achieved year-over-year growth of 5% in Q4 and 15% for the full year, driven by electric power and propulsion and Counter-UAS programs [22] Market Data and Key Metrics Changes - The company reported a year-end backlog of $8.7 billion, providing clear visibility into 2026 growth [10] - The operating environment remains dynamic with global threats persisting, leading to increased defense spending [6][7] Company Strategy and Development Direction - The company aims to build on its foundation of success, accelerate operating cadence, and invest in its workforce [5][6] - Focus areas for R&D investment include airborne, missiles, space, and unmanned markets, with a 40% increase in internal R&D investment in 2025 [9] - The company is committed to a platform-agnostic approach, enhancing capabilities across various vehicle platforms [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand due to significant increases in defense spending and a balanced customer demand across the portfolio [7][8] - The company anticipates continued growth in 2026, with revenue guidance set between $3.85 billion and $3.95 billion, implying 6%-8% organic growth [25][26] Other Important Information - The company entered into a 10-year, $100 million license agreement with a quantum technology company, monetizing laser intellectual property for quantum computing applications [12] - The conclusion of a legacy foreign ground surveillance program resulted in an unanticipated loss, but management does not foresee similar impacts from other programs [12] Q&A Session Summary Question: Potential benefits from the reconciliation bill - Management noted that some funding is beginning to flow, with alignment in priority areas for incremental funding [33][34] Question: Future revenue growth expectations - Management expressed optimism for growth but acknowledged an elongated conversion cycle due to diverse portfolio capabilities [35] Question: Impact of winding down programs on growth - Management indicated that while some areas may grow at different rates, overall funding environment is improving [38][40] Question: Capital structure and deployment - The company prioritizes organic investments first, with a focus on CapEx and R&D to drive future growth [41] Question: Profitability in Integrated Mission Systems - Strong demand and volume leverage contributed to healthy margins in the IMS segment [44] Question: Opportunities in Europe - Management highlighted the urgency for defense spending in Europe and the potential for increased collaboration with their European parent company [82][84]