And yet on the committee, we have pushback almost. Maybe after that, Fed Governor Michael Barr had this to say. I'm concerned that we're seeing inflation still around 3%.Inflation is closer to three, that it is to two. What do you make of that argument. How persuasive is it.It's not persuasive to me, and I'll tell you why. All of the inflation excess, almost all of the inflation excess is a mirage. It's not indicative of supply demand imbalances.And so, for example, if you look at the housing market, right, ...

Financial Data and Key Metrics Changes - The company reported record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in the same quarter of 2025 [5][17] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the prior quarter, marking the fifteenth consecutive quarter of margin expansion [6][21] - Earnings per diluted share was $2.43 for the quarter, representing a record quarter for profitability [20] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $533.9 million, up 5% year-over-year but down 3% sequentially due to planned maintenance [20] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year, with operating income of $9.4 million [23][24] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with bookings accelerating by 23% sequentially [11][12] Market Data and Key Metrics Changes - The aerospace supply chain is experiencing strengthening demand, particularly in the engine submarket, which saw a 14% sequential increase in sales [11][41] - Medical end-use market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [12][13] - Energy end-use market sales were down 5% sequentially but up 8% year-over-year, with order intake increasing by 41% in the quarter [14] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the SAO segment [22][48] - The brownfield expansion project is underway, with construction activities on schedule and expected to accelerate in the second half of fiscal year 2026 [26][27] - The company aims to maintain a balanced capital allocation approach, investing in growth while returning cash to shareholders through stock buybacks and dividends [49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year earnings guidance, projecting operating income of $660 million to $700 million for fiscal year 2026, representing a 26% to 33% increase over the previous year [46] - The aerospace market is expected to see significant demand increases, driven by higher build rates from OEMs like Boeing and Airbus [48][49] - Management noted that the pricing environment for nickel-based superalloys remains favorable due to supply-demand imbalances [35][36] Other Important Information - The effective tax rate for the quarter was 15.4%, lower than anticipated, with expectations for the full fiscal year to be between 21% to 23% [19] - The company generated $39.2 million in cash from operating activities but reported negative adjusted free cash flow of $3.4 million due to capital expenditures [26][28] Q&A Session Summary Question: What has happened to jet engine alloy lead times? - Lead times remain extended, with expectations for them to push out again due to recent positive developments in the Boeing supply chain [57] Question: How are fastener demand trends tracking? - Fastener sales were down 7% sequentially but up 40% year-over-year, with strong order intake expected for calendar year 2026 [63] Question: Can you elaborate on the duration of the new LTAs? - The five new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [68] Question: What is the outlook for defense demand? - The company is seeing strong demand across various defense segments, with a focus on increasing performance through innovative alloys [74] Question: Is there an expectation for continued growth in aerospace bookings? - Management anticipates continued growth in aerospace bookings, with a strong upward trend expected over the next several quarters [90]