Industry Focus - US shipbuilding industry is facing a potential revival due to President Trump's efforts [1] - These efforts to challenge China's dominance have become a point of contention in the broader trade war [1]

Geopolitical & Economic Discussions - The meeting between President Trump and South Korean President Lee Jae-myung will focus on trade, tariffs, and security issues [1] - The summit occurs amidst rising tensions with China and North Korea [1] South Korean Investment Proposal - South Korea is expected to propose a $150 billion investment package named "Make America Shipbuilding Great Again" (MASGA) [1] - The MASGA package includes construction of new US shipyards, training of shipbuilding personnel, and US Navy ship maintenance [1]

Industry Focus - Shipbuilding industry aims to "Make America Shipbuilding Great Again" to improve its position [1] Geopolitical Strategy - Seoul anticipates that supporting the revitalization of American shipbuilding will lead to more favorable terms with Washington [1]

Phoenician Exploration & Navigation - The project aimed to prove Phoenicians could have reached America 2000 years before Columbus [6] - The Phoenicians were skilled sailors, navigating by the Northern Star and circumnavigating Africa [4] - The replica ship, Phoenicia, was 20 meters long and 6 meters wide, built using ancient techniques [8] - The journey started from Carthage (Tunisia), passed through Gibraltar (Kadis), Morocco (Isawira), Canary Islands (Tenedife), Dominican Republic (Santa Domingo), and ended in Miami, Florida [9][10] - Crossing the Atlantic took 39 days, relying on trade winds and sea currents [10] Crew & Shipboard Life - The crew consisted of 12 people (10 men and 2 women) [12] - The crew was divided into three teams of four, with rotating duties including helming, cooking, cleaning, lookout, and pumping water [13] - Sleeping arrangements were basic, with hammocks or thin mattresses below deck [14] - Limited fresh water supplies meant using seawater for cooking, showering, and washing clothes [16] Cultural & Historical Significance - The Phoenicians were the indigenous people of the Levant, based in Lebanon and neighboring countries [2][3] - They invented the alphabet, traded purple dye, invented blown glass, and were skilled shipbuilders [3] - The Phoenicians focused on trade, exchange, and building connections rather than exploitation [5][20] - The Lebanese diaspora showed strong connection to their heritage upon seeing the ship [18][19]

US-Australia Trade Relations - A meeting regarding trade between the US and Australia is unlikely to result in significant tariff changes [1] - The US has concerns regarding Australia's biosecurity measures, particularly related to beef imports [4] - Australia has maintained a trade surplus with the US since 1952 [4] - While Australia only exports about 4% of its total goods to the US, the US is the biggest investor in Australia and the biggest destination for Australian capital, with approximately 14 trillion in each direction [9][10] Beef Trade Dispute - The US seeks assurance that beef exported to Australia is born and bred in the US, not from cattle crossing the borders from Mexico and Canada [6] - Australia is standing firm on its biosecurity measures regarding beef imports [7] - The US President is concerned that Australia hasn't allowed one American Big Mac into the country [6] Geopolitical and Economic Concerns - Actions in the Middle East are currently considered more important than trade matters with Australia [3] - The slowdown of the Chinese economy is a significant concern for Australian companies [8] - China's potential limitations on exports of critical minerals needed in batteries could impact Australian companies [9] Shipbuilding and AUKUS - The US is prioritizing increasing its shipbuilding capacity [12] - An Australian company, Austal, operating in Alabama, has built approximately a third of the ships in the US Navy [13] - Australia has made an 800 million AUD down payment on the 3 billion AUD investment in the subs uplift [15] - There is no expectation that AUKUS will be cancelled, as it is in America's strategic and economic interests [15]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 16% in Q1, significantly above expectations, primarily due to favorable timing of material receipts [22][24] - Adjusted EBITDA for the quarter was $82 million, representing a 17% growth year-over-year, with an adjusted EBITDA margin of 10.3%, reflecting a slight year-over-year margin expansion of 10 basis points [24][26] - First quarter net earnings were $50 million, with diluted EPS of $0.19, marking a 7273% increase, while adjusted net earnings were $54 million, with adjusted diluted EPS of $0.20, up 42% [26][30] Business Line Data and Key Metrics Changes - The Advanced Sensing and Computing (ASC) segment saw a revenue growth of 18%, while the Integrated Mission Systems (IMS) segment's revenue increased by 11% [23][24] - ASC adjusted EBITDA increased by 2%, but the margin declined by 130 basis points due to negative contract adjustments and increased costs from a sole source supplier [25][26] - IMS adjusted EBITDA rose by 38%, with margin expansion of 260 basis points, driven by favorable contract adjustments and increased volume from the Columbia Class program [25][26] Market Data and Key Metrics Changes - The company secured nearly $1 billion in bookings during the quarter, resulting in a book-to-bill ratio of 1.2, marking the thirteenth consecutive quarter with a book-to-bill above one [6][20] - The backlog increased to $8.6 billion, reflecting growth on both a year-over-year and sequential basis [7][20] - Domestic growth was highlighted, while international growth faced some headwinds due to timing of deliveries [35][36] Company Strategy and Development Direction - The company is focused on enhancing its role in national defense initiatives, particularly in layered air defense, counter UAS, and shipbuilding [11][12] - The company is investing in its Charleston facility to support shipbuilding and is exploring opportunities in electric propulsion and unmanned naval platforms [17][18] - The company is also advancing its AI capabilities to enhance threat detection and situational awareness in combat vehicles [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic operating environment but expressed confidence in maintaining a book-to-bill ratio above one for 2025 [10][11] - The global threat environment remains elevated, which is expected to sustain demand for defense spending [11][12] - The company anticipates the FY '26 President's Budget Request will provide clarity on funding allocations for key priorities [11][12] Other Important Information - The company initiated a dividend payment and stock repurchases as part of its capital return initiatives [8][20] - The company is actively engaged in M&A opportunities, viewing them as a top priority for capital allocation [78][79] - The company has implemented economic price adjustment clauses in contracts to mitigate risks associated with price volatility of raw materials [81][82] Q&A Session Summary Question: Can you talk about material receipts and international growth? - The material acceleration impacted revenue holistically across the board, with domestic growth being the primary contributor while international growth faced some headwinds [35][36] Question: What are the margin expectations for ASC? - The ASC segment is expected to have a lower gross margin prospectively, but adjustments made in Q1 should mitigate some impacts moving forward [41] Question: How do you see your share of the defense budget evolving? - The company expects to grow ahead of the defense budget, aligning with the administration's priorities in shipbuilding and force protection [56][58] Question: What is the opportunity in the European defense market? - There is a substantial near-term opportunity in areas like counter-drone systems and advanced sensing programs, although competition may evolve over time [66] Question: How is the company positioned for Navy opportunities? - The company is engaged in discussions to increase its role in shipbuilding and is positioned to support the Navy's increased throughput needs [70][71] Question: What is the outlook for interest expense? - The company anticipates a lower interest burden for the full year due to improved cash position and linearity [111]