Financial Data and Key Metrics Changes - Q4 2025 revenue reached a record $215.8 million, a 9.4% increase from $197.3 million in Q4 2024, marking the 19th consecutive quarter of year-over-year revenue growth [8][24] - Gross margins improved to 27.7% in Q4 2025, up from 23.5% in Q4 2024, with adjusted EBITDA margins at 17.5%, up from 13% in 2022 [10][12][14] - GAAP EPS was $0.48 per diluted share in Q4 2025, compared to $0.45 in Q4 2024, while adjusted diluted EPS was $1.05, up from $0.75 in the prior year [13][27] Business Line Data and Key Metrics Changes - Military and space segment revenues grew 13% to $124 million in Q4 2025, driven by strong performance in fixed-wing aircraft, rotorcraft, and missiles [17][24] - Commercial aerospace segment revenue increased by 1% to $82 million, with growth in A320 and 787 platforms offsetting declines in the 737 MAX [20][24] - Structural Systems segment revenue was $96 million, up from $90 million, with operating income margin increasing to 15.2% from 3.6% [28] - Electronic Systems segment revenue rose to $120 million, with operating income margin at 18.4%, up from 17.7% [29] Market Data and Key Metrics Changes - The remaining performance obligation (RPO) grew to a record $1.1 billion, increasing by $75 million sequentially, primarily in defense businesses [9] - Book-to-bill ratio was 1.3x in Q4, indicating strong order intake relative to revenue [10] - The company expects continued strength in defense business and a recovery in commercial aerospace in the second half of 2026 [16] Company Strategy and Development Direction - The company is executing its VISION 2027 strategy, focusing on increasing the revenue percentage of engineered products and aftermarket content, which rose to 23% in 2025 from 15% in 2022 [7] - The next investor conference will present the Vision 2032 strategy, indicating a long-term growth outlook [8] - The company aims to achieve an 18% EBITDA margin by 2027, with current margins trending positively [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum from both military and commercial aerospace markets, anticipating mid-to-high single-digit revenue growth for 2026 [16][14] - The company highlighted the importance of relationships with defense primes and the expected ramp-up in missile production as key growth drivers [18][70] - Management noted that tariffs have not materially impacted results and expect to continue mitigating their effects [25][26] Other Important Information - The company entered into a binding settlement for the Guaymas fire litigation, resulting in a $150 million payment, with $56 million covered by insurance [15] - The restructuring program has been completed, with expected annual savings of $11 million to $13 million by the end of 2026 [31] Q&A Session Summary Question: Inventory destocking and working capital - Management expects continued destocking in the first half of 2026, with improvements anticipated in the second half as inventory levels decrease [39][40] Question: Medium-term opportunities in defense - Management indicated that they have significant existing capacity to meet increased demand, with a conservative estimate of at least 30% available capacity [50][51] Question: Margin outlook for 2026 - Management suggested that the exit rate for EBITDA margins should be viewed closer to 16.5% for 2026, with potential for improvement as production ramps up [59][60] Question: M&A market activity - Management noted increased activity in the M&A market, with a focus on disciplined evaluation of opportunities within their target range [96][97]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 reached a record $215.8 million, a 9.4% increase from $197.3 million in Q4 2024, marking the 19th consecutive quarter of year-over-year revenue growth [9][24] - Gross margins improved to 27.7% in Q4 2025, up from 23.5% in Q4 2024, with adjusted gross margins at 27.7%, a 370 basis point increase from 24% in the prior year [11][25] - Adjusted EBITDA margin for Q4 2025 was 17.5%, up from 13% in 2022, indicating significant progress towards the Vision 2027 goal of 18% [12][14] - GAAP EPS was $0.48 per diluted share in Q4 2025, compared to $0.45 in Q4 2024, while adjusted diluted EPS was $1.05, up from $0.75 in the prior year [13][27] Business Line Data and Key Metrics Changes - Military and space segment revenues grew 13% to $124 million in Q4 2025, driven by strong performance in fixed-wing aircraft, rotorcraft, and missiles [18][24] - Commercial aerospace segment revenues increased by 1% to $82 million, with growth in A320 and 787 platforms offsetting declines in the 737 MAX [20][24] - Structural Systems segment revenue was $96 million, up from $90 million, with operating income margin increasing to 15.2% from 3.6% [28][29] - Electronic Systems segment revenue rose to $120 million, with operating income margin at 18.4%, up from 17.7% [30][31] Market Data and Key Metrics Changes - The remaining performance obligation (RPO) grew to a record level of $1.1 billion, increasing by $75 million sequentially, primarily in defense businesses [10] - Book-to-bill ratio was 1.3x in Q4, indicating strong order intake relative to revenue [10] - The company expects continued strength in the defense business and a recovery in commercial aerospace in the second half of 2026 [17] Company Strategy and Development Direction - The company is executing its Vision 2027 strategy, focusing on increasing the revenue percentage of engineered products and aftermarket content, which rose to 23% in 2025 from 15% in 2022 [8] - The company plans to hold an investor conference in September 2026 to present the next five-year vision, Vision 2032 [9] - The strategy includes consolidating operations, driving evaluated pricing, and expanding content on key commercial aerospace platforms [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum from both military and commercial aerospace markets, anticipating mid-to-high single-digit revenue growth for 2026 [17][15] - The company highlighted the importance of relationships with defense primes and the expected ramp-up in missile production as a growth catalyst starting in 2027 [19][70] - Management noted that tariffs have not materially impacted results and expect this trend to continue [25][26] Other Important Information - The company entered into a binding settlement for the Guaymas fire litigation, resulting in a payment of $150 million, with $56 million funded by insurance [16] - The restructuring program has been completed, with expected annual savings of $11 million to $13 million by the end of 2026 [32] Q&A Session Summary Question: Inventory destocking and working capital - Management expects continued destocking in the first half of 2026, with improvements anticipated in the second half as inventory levels decrease [40][41] Question: Medium-term opportunities in defense - The company is well-positioned to benefit from increased production capacity among primes, particularly in missile programs, with significant existing capacity available [44][46] Question: Growth potential without additional CapEx - Management indicated that there is at least 30% existing capacity available for growth without significant additional CapEx [50][51] Question: Margin outlook for 2026 - The exit rate for EBITDA margins is expected to be closer to 16.5% for 2026, with opportunities for improvement as production ramps up [60][61] Question: M&A market activity - The company is seeing increased M&A activity and remains disciplined in evaluating opportunities, with a focus on assets that align with their engineered products strategy [93][94]