Financial Data and Key Metrics Changes - The company achieved record earnings with adjusted operating income of $153 million, a 31% increase year-over-year compared to $117.2 million in Q1 FY2025 [4][15] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the previous quarter [5][6] - Earnings per diluted share was $2.43 for the quarter, marking another record for profitability [16] 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 [17] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year [19] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with engine submarket sales up 14% sequentially [9][88] Market Data and Key Metrics Changes - Aerospace and defense bookings accelerated by 23% over the previous quarter, indicating strengthening market demand [7][30] - Medical market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [10] - Energy market sales were down 5% sequentially but up 8% year-over-year, driven by increasing demand for power generation [11] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the aerospace and defense sectors [12][39] - The Brownfield expansion project is underway, with construction activities on schedule and on budget, expected to accelerate in the second half of FY2026 [21][22] - The company maintains a balanced capital allocation approach, focusing on growth investments and returning cash to shareholders through dividends and share repurchases [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the high end of the fiscal year 2026 operating income guidance of $660 million to $700 million, driven by increased volume and pricing actions [36][37] - The aerospace market is expected to see significant demand growth, with OEMs ramping up production rates, which will positively impact the company's order intake [30][34] - Management noted that the pricing environment for nickel-based super alloys remains favorable, with expectations for continued price increases due to supply-demand imbalances [26][28] Other Important Information - The company generated $39.2 million in cash from operating activities but had negative adjusted free cash flow of $3.4 million due to capital expenditures [21] - The liquidity position is strong, with $556.9 million available, including $208 million in cash [23] Q&A Session Summary Question: What has happened to jet engine alloy lead times? - Lead times remain extended, with expectations for further increases in orders following positive news from Boeing [48][50] Question: Can you elaborate on the duration of the new LTAs? - The new LTAs range from two to five years, with expectations that contract lengths will remain consistent with current levels [62] 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 [55] Question: Is there line of sight to another quarter of sequential A&D growth? - Continued growth in order intake is anticipated, although specific percentages cannot be guaranteed [80] Question: What is the outlook for the Brownfield expansion project? - Construction is expected to be complete by late FY2027 or early FY2028, with current activities focused on site preparation [90]

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 Q1 FY2025 [4][14] - Adjusted operating margin for the SAO segment reached 32%, up from 26.3% a year ago and 30.5% in the previous quarter [5][16] - Earnings per diluted share was $2.43 for the quarter, marking another record for profitability [15] 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 [16] - PEP segment net sales excluding surcharge were $87.2 million, down 10% sequentially and down 6% year-over-year [18] - Aerospace and defense sales were up 1% sequentially and 11% year-over-year, with bookings accelerating by 23% over the previous quarter [9][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 [9][32] - Medical market sales were down 20% sequentially and 16% year-over-year, primarily due to volatility in medical distribution [10] - Energy market sales were down 5% sequentially but up 8% year-over-year, driven by increasing demand for power generation [11] Company Strategy and Development Direction - The company is focused on expanding profitability and margins through productivity improvements and pricing actions, particularly in the aerospace and defense sectors [5][12] - The Brownfield expansion project is underway, with construction activities on schedule and on budget, expected to accelerate in the second half of FY2026 [20][21] - The company aims to maintain a balanced capital allocation approach, investing in growth while returning cash to shareholders through dividends and share repurchases [22][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the high end of the earnings guidance for FY2026, projecting operating income of $660 million to $700 million, a 26% to 33% increase over FY2025 [35][36] - The aerospace market is expected to see significant demand growth, with management noting a positive outlook from customers regarding order intake [30][34] - The company anticipates continued pricing power due to a supply-demand imbalance in nickel-based super alloys [26][39] Other Important Information - 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 [20] - Liquidity as of the latest quarter was $556.9 million, with a net debt to EBITDA ratio well below one [23] Q&A Session Summary Question: What has happened with jet engine alloy lead times? - Lead times remain extended, with expectations for further increases in orders following positive news from Boeing [44] 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 [52] 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 [48] Question: Is there line of sight to another quarter of sequential A&D growth? - Continued growth in order intake is expected over the next several quarters [63] Question: What is the outlook for the Brownfield expansion project? - Construction is expected to be complete by late FY2027 or early FY2028, with current activities focused on site preparation [70]

Core Viewpoint - The "Nickel City Innovation Week" in Jinchang City, Gansu Province, highlights the integration of technology and economy, showcasing innovative achievements and fostering collaboration among government, enterprises, academia, and research institutions [1] Group 1: Innovation and Industry Development - Jinchang City has focused on enhancing technological innovation, resulting in a perfect score in two innovation indicators during the Gansu Province business environment assessment in the first half of 2025, ranking first in the province [1] - The production of "hand-teared nickel," a super-thin material used in the core of new energy batteries, demonstrates the city's advancements in the new energy battery industry, with local supply rates for raw materials reaching 77% [2] - Jinchang has established a comprehensive industrial system for new energy batteries, focusing on nickel-cobalt-manganese lithium batteries and lithium iron phosphate batteries [2] Group 2: Support for Enterprises - The city has implemented various support policies, including the establishment of industrial investment funds and risk compensation funds, to empower enterprises in their innovation efforts [2] - Over 95% of major provincial and municipal scientific projects are led by enterprises, indicating strong collaboration between industry and academia [3] - The total number of high-tech enterprises in Jinchang has reached 87, with 61 recognized as provincial-level innovative enterprises [3] Group 3: Collaborative Platforms - The establishment of the Gansu Yuansheng New Dairy Sheep Industry Research Institute exemplifies the collaboration between universities and enterprises to enhance technological innovation [4] - Multiple collaborative bases have been created, including industrial internet security laboratories and joint training bases, to support industry development [4] - Significant technological breakthroughs have been achieved, such as the development of nickel-based high-temperature alloys and domestication of medical heavy ion accelerator materials [5] Group 4: Future Directions - Jinchang City aims to continue implementing innovation-driven development strategies, optimizing the innovation ecosystem, and enhancing innovation capabilities to promote the deep integration of technological and industrial innovation [5]

Company Overview - Chuangcai Deep Learning (Suzhou) Technology Co., Ltd. focuses on "AI + new material solutions" and was established in 2021, comprising experts from materials science, artificial intelligence, and mechanical engineering [3] - The company has developed a high-throughput R&D platform and intelligent computing engine to accelerate the development and application of new materials [3] Recent Financing - The company recently completed several million yuan in Series A financing, led by Heshijia Capital and Chenhui Capital [2] - The funds will be used for new material R&D iteration, high-throughput automated laboratory upgrades, AI model development, and large-scale applications in vertical industry scenarios [2] Product Development - Chuangcai Deep Learning has developed three new materials in just six months, showcasing its rapid innovation capabilities [2] - The company plans to launch its self-developed integrated hardware and software material intelligence platform (DM Agent) at the TCT Shenzhen Exhibition on September 10 [2] Material Offerings - The company offers 3D printing metal powder materials, high-throughput R&D equipment, and high-end metal material R&D services [5] - Notable products include: - Medium and high-strength aluminum alloys with excellent performance and cost-efficiency - Nickel-based high-temperature alloys that prevent cracking during printing and heat treatment - Tool steels with high toughness and excellent thermal conductivity [5] AI-Driven R&D - The company employs an AI-driven approach to accelerate the development of advanced materials in key sectors such as aerospace and mold manufacturing [6] - Utilizing AI for Science's fifth paradigm in materials informatics, the company innovates a "AI + metal materials" R&D model, leveraging material computation, machine learning, and deep neural networks [7] High-Throughput R&D System - Chuangcai Deep Learning has established a comprehensive high-throughput R&D system that collects vast amounts of diverse material data quickly and cost-effectively [9] - The company provides a one-stop service covering product R&D, sample design, metal powder, production processing, quality testing, and performance analysis [9] Investment Insights - Heshijia Capital recognizes the company's ability to integrate AI with digital manufacturing, viewing the DM Agent platform as a potential game-changer in low-cost material research and application innovation [9] - Chenhui Capital sees significant potential in the company's disruptive "AI + new materials" model, which transforms traditional trial-and-error R&D into predictive R&D, addressing long development cycles and high costs [10]