Financial Data and Key Metrics Changes - The company reported record operating income of $155 million for the second quarter, a 31% increase compared to the same quarter of fiscal year 2025 [4][15] - Adjusted operating margin for the SAO segment reached 33.1%, up from 28.3% a year ago and 32% in the prior quarter [6][17] - Adjusted earnings per diluted share was $2.33 for the quarter, excluding the impact of debt refinancing [15][16] Business Line Data and Key Metrics Changes - SAO segment net sales excluding surcharge were $527.3 million, up 10% year-over-year, while PEP segment net sales were $77.2 million, down 11% sequentially and down 10% year-over-year [16][18] - SAO reported operating income of $174.6 million, a 29% increase year-over-year, while PEP reported operating income of $6.9 million [7][18] Market Data and Key Metrics Changes - Sales in the aerospace and defense end-use market were down 1% sequentially but up 15% year-over-year, with aerospace engine materials order intake up 30% sequentially [9][10] - Medical end-use market sales were down 7% sequentially and 22% year-over-year, primarily due to specific titanium product demand [11] - Energy end-use market sales were down 10% sequentially but up 19% year-over-year, driven by power generation demand [12] Company Strategy and Development Direction - The company is focused on capital allocation towards growth projects and returning cash to shareholders through share repurchases and dividends [20][21] - A brownfield capacity expansion project is underway, aimed at increasing production capacity for nickel-based superalloys [30][36] - The company anticipates continued strong demand in aerospace and defense markets, with a focus on securing long-term agreements with customers [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the aerospace demand environment, citing significant increases in order intake and production rates [23][25] - The company raised its fiscal year 2026 operating income guidance to $680 million-$700 million, reflecting a 30%-33% increase over the previous fiscal year [34][37] - Management noted that pricing actions will continue to be a positive tailwind due to supply-demand imbalances in the nickel-based superalloy market [33] Other Important Information - The company generated $132.2 million in cash from operating activities and expects to generate at least $280 million of adjusted free cash flow in fiscal year 2026 [20][22] - Total liquidity was reported at $730.8 million, including $231.9 million in cash [22] Q&A Session Summary Question: How broad-based is the participation of airframe customers in ordering? - Management noted increased activity across all aerospace sub-markets, with significant sequential increases in engine orders and structural customer orders coming off the sidelines [41][42] Question: What visibility is there regarding the defense sub-market orders? - Management indicated that there is pent-up demand from the defense sub-market due to previous government shutdowns, and orders are expected to come back rapidly [43][44] Question: Is pricing still trending higher? - Management confirmed that pricing remains strong, with no discounts on premium aerospace products, and expects continued upward pricing trends [45][48] Question: How did engine and fastener sales trend during the quarter? - Sales were relatively flat quarter-over-quarter, but year-over-year sales showed substantial increases across all aerospace sub-markets [83][84] Question: What is the outlook for the additive business? - Management sees potential for growth in the additive business, with improved adoption rates and increased activity from large customers [86][88]