Financial Data and Key Metrics Changes - Second quarter net sales were $455.3 million, a 14.4% increase year-over-year, driven by strong performance in aerospace and defense segments [3][4] - Consolidated gross margin for the quarter was 44.1%, up from 43.7% in the same period last year, with adjusted EPS at $2.88 compared to $2.29 last year [3][9] - Free cash flow for the period was $71.7 million, with a conversion rate of 119.5%, compared to $26.8 million and 49.4% last year [11] Business Line Data and Key Metrics Changes - Aerospace and defense (A&D) sales increased by 38.8% year-over-year, with commercial aerospace up 21.6% and defense up 73.3% [4][9] - Industrial business was up 0.7%, with industrial distribution increasing by 3.3% while the OEM sector decreased by 4.7% [6][9] Market Data and Key Metrics Changes - Backlog increased to $1.6 billion from $940 million in March and $860 million last year, with expectations to approach $2 billion by year-end [4][19] - Demand across the A&D sector remains strong, with over 90% of the backlog attributed to A&D [18] Company Strategy and Development Direction - The company is focused on expanding manufacturing capacities in marine and aircraft plants to meet increasing demand [5][6] - The strategy includes integrating Vacco and driving operational efficiencies while maintaining a focus on organic growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for A&D products, with production rates for submarines and commercial aircraft at unprecedented levels [6][21] - The outlook for margin expansion is positive, with expectations for continued growth in both A&D and industrial sectors [21][54] Other Important Information - The company finalized an amendment to its credit facility, extending the revolver until 2030, and plans to pay off the term loan by November 2026 [11] - The company is leveraging AI in engineering and manufacturing processes to enhance productivity and problem-solving capabilities [60] Q&A Session Summary Question: Can you provide details on backlog growth and its drivers? - Approximately $500 million of the backlog increase is due to the Vacco acquisition, with the remainder up more than 20% year-over-year, primarily in A&D [18][19] Question: What is the current capacity utilization for aerospace plants? - Capacity utilization for the airframe business is at 100%, with plans to add capacity and shifts to meet demand [21] Question: What was the growth in Aero OEM and distribution? - Commercial OEM grew 27.9%, while commercial distribution was flat, down 2% [24][25] Question: How is the company addressing potential margin expansion with Vacco? - Vacco is currently running in the mid-20% margins, with expectations for operational synergies to improve margins over time [26][28] Question: Is there any impact from critical minerals or rare earths? - There has been no impact from critical minerals, but there was a previous issue with the availability of exotic stainless steels, which has since improved [56] Question: How is AI being utilized in the company? - AI is being used to enhance problem-solving and engineering processes, providing quick and effective solutions [60][62]