Financial Data and Key Metrics Changes - Annual revenue exceeded $3.5 billion for the first time, marking a record performance [5] - Fourth quarter net sales totaled $995 million, an increase of 16%, while total net sales for 2025 were $3.6 billion, up 7% [17] - Adjusted earnings per share for the fourth quarter were $2.09, compared to $1.41, and for 2025, earnings per share were $7.19, up from $6.01 [17][24] Business Line Data and Key Metrics Changes - Aerospace segment sales increased 20% in the fourth quarter to $661 million, with commercial services sales up 40% [18] - Industrial segment sales for the fourth quarter were $334 million, up 11%, with core industrial sales growing 15% [20] - Aerospace segment earnings for the fourth quarter were $162 million, with margins expanding 520 basis points to 24.4% [18] Market Data and Key Metrics Changes - Aerospace sales growth was driven by strong demand in defense OEM, which increased 27%, while commercial OEM sales were flat [18] - Industrial sales growth included 15% in transportation and 13% in oil and gas, while power generation grew only 6% due to a divestiture [21] - Core industrial margins expanded 330 basis points to 15.2% of core industrial sales, driven by price realization [23] Company Strategy and Development Direction - The company is focused on growth, operational excellence, and innovation, with strategic investments in automation and new facilities [9][11] - A new facility in Spartanburg, South Carolina, is under construction to support advanced manufacturing and increased capacity [10] - The company aims to capture growth in aerospace and industrial markets, with expectations for increased OEM orders and sustained demand [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory across segments, with guidance for 2026 reflecting continued strong demand [26] - Aerospace segment earnings are expected to be 22%-23% of segment sales, while industrial segment earnings are projected at 14.5%-15.5% [27] - The company anticipates a modest adjustment to cumulative free cash flow targets due to increased capital allocation towards high-return growth investments [16][25] Other Important Information - The company returned over $238 million to shareholders in 2025, including $173 million in share repurchases [24] - A new three-year share repurchase program has been authorized for up to $1.8 billion, reflecting confidence in the company's strategy [25] - Capital expenditures for 2026 are expected to be approximately $290 million, including investments in automation and the Spartanburg facility [28] Q&A Session Summary Question: What growth is expected for legacy narrowbody engine aftermarket in 2026? - Management expects single-digit growth rates for legacy narrowbody engines in 2026, with some price increases anticipated [42][44] Question: How much of the current power generation revenue is tied to Caterpillar? - Management indicated healthy growth from power generation customers, including Caterpillar, but did not specify revenue tied to individual customers [47][49] Question: What are the assumptions for OE de-stocking? - Management expects de-stocking to occur around the second quarter of the fiscal year if airframe and engine customers meet forecasted rates [81][82] Question: Will capital expenditures normalize after the A350 build-out? - Management indicated that the Spartanburg investment is causing a peak in capital expenditures, with future investments being evaluated [90] Question: How should shareholders expect the return of capital to be distributed? - Management plans to spread the return of capital evenly throughout the year [111]

Financial Data and Key Metrics Changes - Annual revenue exceeded $3.5 billion for the first time, marking a record performance [5] - Adjusted earnings per share increased nearly 13% compared to the prior year [6] - Net sales for Q4 2025 totaled $995 million, a 16% increase, while net sales for the full year reached $3.6 billion, a 7% increase [17] - Earnings per share for Q4 2025 were $2.23 compared to $1.36, and adjusted earnings per share were $2.09 compared to $1.41 [17] Business Line Data and Key Metrics Changes - Aerospace sales increased 14% to record levels, with margin expansion of 290 basis points [6] - Industrial segment sales for Q4 were $334 million, up 11%, with core industrial sales growing 15% [20] - Commercial services sales in the aerospace segment increased 40%, while defense OEM sales rose 27% [18] - Industrial segment earnings for Q4 were $49 million, or 14.6% of segment sales, compared to $38 million, or 12.6% of segment sales [21] Market Data and Key Metrics Changes - Aerospace segment sales for the full year were $2.3 billion, up 14%, driven by strong demand in commercial services and defense OEM [18] - Industrial sales anticipated to grow across all primary markets, with power generation growth expected to be muted in the first half of 2026 due to divestiture impacts [26][27] - China on-highway sales in 2026 expected to be approximately $60 million, in line with 2025 [27] Company Strategy and Development Direction - Company focuses on strong execution, capturing growth in markets, and driving operational excellence [15] - Strategic investments in automation and new facilities to support long-term growth [11][24] - Continued emphasis on innovation and partnerships to enhance technology solutions [14] Management's Comments on Operating Environment and Future Outlook - Management expects sustained demand across core markets, with a modest adjustment to cumulative free cash flow target due to increased capital allocation towards growth investments [16] - Anticipated strong repair growth for LEAP and GTF engines, with expectations for LEAP and GTF repair revenue to surpass legacy repair revenue by late 2026 or early 2027 [8][15] - Management remains confident in the growth trajectory across segments, with guidance for 2026 reflecting continued operational discipline [16][26] Other Important Information - Capital expenditures for 2025 were $131 million, driven by investments in automation and new facility construction [24] - New three-year share repurchase program authorized for up to $1.8 billion, reflecting confidence in the company's strategy and growth outlook [25] Q&A Session Summary Question: What growth is expected for legacy narrowbody engine aftermarket in 2026? - Management expects single-digit growth rates for legacy narrowbody engines in 2026, with some price increases anticipated [42][44] Question: How much of the current power generation revenue is tied to Caterpillar? - Management indicated healthy growth from power generation customers, including Caterpillar, but did not specify exact revenue figures [47][49] Question: What are the assumptions for OE de-stocking? - Management anticipates de-stocking could occur by the second quarter of fiscal year 2026 if airframe and engine customers meet forecasted rates [81][82] Question: Will capital expenditures normalize after the A350 build-out? - Management indicated that the Spartanburg investment is causing a peak in capital expenditures, with future investments being evaluated [90] Question: How should shareholders expect the return of capital to be distributed? - Management plans to spread the return of capital evenly throughout the year [111]

Financial Data and Key Metrics Changes - Annual revenue exceeded $3.5 billion for the first time, marking a 7% increase year-over-year [5][16] - Fourth quarter net sales totaled $995 million, a 16% increase [16] - Adjusted earnings per share for the fourth quarter were $2.09, up from $1.41, while full-year adjusted earnings per share were $6.89 compared to $6.11 [16][24] Business Line Data and Key Metrics Changes - Aerospace segment sales increased 20% in the fourth quarter to $661 million, with commercial services sales up 40% [17] - Industrial segment sales for the fourth quarter were $334 million, an 11% increase, with core industrial sales growing 15% [20][21] - Aerospace segment earnings for the fourth quarter were $162 million, with margins expanding 520 basis points to 24.4% [17] Market Data and Key Metrics Changes - Aerospace sales for the full year reached $2.3 billion, a 14% increase, driven by strong demand in commercial services and defense OEM [17][19] - Industrial segment sales for 2025 were $1.25 billion, a 3% decrease, but core industrial sales increased 10% [22][23] - Marine transportation grew 9%, driven by elevated ship build rates [22] Company Strategy and Development Direction - The company is focused on growth, operational excellence, and innovation, with strategic investments in automation and new facilities [9][11][15] - A new facility in Spartanburg, South Carolina, is under construction to support advanced manufacturing [10][11] - The company aims to capture growth in aerospace and industrial markets while expanding capabilities in regional repair and overhaul [14][15] Management's Comments on Operating Environment and Future Outlook - Management expects continued strong demand in aerospace and industrial markets, with a focus on operational excellence [14][15] - The guidance for 2026 reflects confidence in growth across segments, with net sales growth expected between 7% and 12% [26][28] - Anticipated challenges include muted top-line growth in commercial services due to advanced purchases in 2025 [14][28] Other Important Information - The company returned over $238 million to shareholders in 2025, including $173 million in share repurchases [24][25] - A new three-year share repurchase program has been authorized for up to $1.8 billion [25] - Capital expenditures for 2025 were $131 million, with expectations for approximately $290 million in 2026 [24][29] Q&A Session Summary Question: What growth is expected for legacy narrowbody engine aftermarket in 2026? - Management expects single-digit growth rates for legacy narrowbody engines in 2026, with some price increases anticipated [40][41] Question: Does the EPS guide include any benefit from the recent share repurchase authorization? - Yes, the EPS guidance includes the expected benefits from the share repurchase authorization [42] Question: How much current power generation revenue is tied to Caterpillar? - Management noted healthy growth from power generation customers, including Caterpillar, but did not specify exact revenue figures [44][45] Question: What are the assumptions for OE de-stocking? - Management anticipates de-stocking could occur by the second quarter of fiscal 2026 if airframe and engine customers meet forecasted rates [69] Question: How should shareholders expect the return of capital to be distributed? - The plan is to spread the return of capital evenly throughout the year [84] Question: Will Q1 margins be below the rest of the year? - Historically, Q1 margins are lower, with expectations for sequential growth throughout the year [85]