Financial Data and Key Metrics Changes - Adjusted EPS for the quarter was $1.49, reflecting a 6.5% core sales growth driven by aerospace and process flow technologies [4][20] - Core FX neutral backlog increased by 29% year over year, reaching over $1 billion, while core FX neutral orders were up 19% compared to last year [21][24] - Adjusted operating profit increased by 15%, supported by strong net pricing and productivity [20] Business Line Data and Key Metrics Changes - Aerospace and Electronics segment sales reached $258 million, a 12% increase, with total aftermarket sales up 18% [24] - Process Flow Technologies delivered sales of $319 million, up 7%, with core sales growth of 3% [25] - Adjusted segment margin for Aerospace and Electronics was a record high of 26.3%, up from 23.8% last year [24] Market Data and Key Metrics Changes - Aerospace and defense markets are experiencing strong demand, with Boeing ramping up production and solid procurement spending in defense [13][16] - The chemical market is showing softness, particularly in Europe, but other segments like cryogenics and wastewater are growing [48][49] Company Strategy and Development Direction - The company announced the acquisition of Precision Sensors and Instrumentation businesses from Baker Hughes, aiming to enhance its technology portfolio [5][11] - The company is optimistic about deploying further capital for acquisitions, with a robust pipeline of opportunities [6][11] - The strategy focuses on leveraging existing strengths and pursuing new business opportunities to ensure sustainable growth [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising the full-year adjusted earnings outlook to a range of $5.5 to $5.8 billion, up from the previous range of $5.3 to $5.6 billion [7][28] - The macroeconomic environment remains unpredictable, but strong execution and a solid backlog provide confidence for future performance [7][16] Other Important Information - The company is in a net cash position, with leverage expected to be around 1x net debt to EBITDA after the PSI transaction [22] - Tariff impacts are anticipated to be offset through pricing and productivity measures, with a gross cost increase of approximately $30 million for the year [22][23] Q&A Session Summary Question: Can you discuss the areas of strength in the Aerospace and Electronics business? - Management noted broad-based strength across both commercial and military sectors, with significant orders in air defense and communication platforms for future years [32][34] Question: What is driving the expected drop in A&E margins in the second half? - The mix shift towards commercial OEM and challenging year-over-year comparisons in the aftermarket are expected to impact margins [35][36] Question: How is the GTF program performing in the aftermarket? - The GTF aftermarket revenues are growing at around 15% this year, with expectations of 30% growth next year, although it currently represents less than 5% of commercial aftermarket sales [39][40] Question: Can you provide insights on the cadence of PFT orders? - Orders were up 4% year over year, with stable market conditions, although some softness was noted in the chemical market [46][48] Question: What is the expected impact of the R&D tax changes? - A modest improvement in free cash flow is expected, but nothing significant, estimated to be less than 5% of total free cash flow [57] Question: How confident is the company in achieving the 10% ROIC from the PSI acquisition? - Management expressed high confidence in improving margins and achieving the targeted ROIC through operational efficiencies and strong aftermarket demand [78][79] Question: Are there any signs of project cancellations in the chemical market? - No significant cancellations are observed, but some projects are being pushed to the right due to customer demand uncertainties [94][96]

Financial Data and Key Metrics Changes - Adjusted EPS was $1.49, driven by a 6.5% core sales growth, reflecting strength in aerospace and process flow technologies [4][21] - Adjusted operating profit increased by 15%, driven by strong net price and productivity [21] - Core FX neutral backlog increased by 29% year-over-year, driven by strength in Aerospace and Electronics [21] - Core FX neutral orders were up 19% compared to last year, also driven by Aerospace and Electronics [21] Business Line Data and Key Metrics Changes - Aerospace and Electronics segment sales were $258 million, up 12% in the quarter, with a record backlog of over $1 billion [24] - Total aftermarket sales increased by 18%, with commercial aftermarket sales up 9% and military aftermarket up 37% [24] - Process Flow Technologies delivered sales of $319 million, up 7%, with core sales growth of 3% [25] Market Data and Key Metrics Changes - Aerospace and defense markets continue to see strong demand, with Boeing ramping up production and solid procurement spending in defense [14] - The cryogenics business reached a record high backlog driven by strong demand in space launch and other segments [18] - Chemical market remains stable but soft, with lower CapEx expenditures from customers [48] Company Strategy and Development Direction - The company announced the acquisition of Precision Sensors and Instrumentation businesses from Baker Hughes, aiming to enhance its technology portfolio [5][13] - The company is optimistic about deploying further capital on acquisitions over the next several quarters [6] - The company plans to integrate the acquired businesses into its existing segments to drive growth and operational efficiency [12][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising the full-year adjusted earnings outlook to a range of $5.5 to $5.8, up from the previous range of $5.3 to $5.6 [6][28] - The macroeconomic environment remains unpredictable, but strong execution and a solid backlog provide confidence for future performance [6][14] - Management noted that while the commercial aftermarket growth may moderate, they expect continued above-market growth in the aerospace and electronics segment [15][19] Other Important Information - The company is in a net cash position and expects leverage to remain below its targeted range after the PSI transaction [22] - Tariff impacts are anticipated to be offset through pricing and productivity measures [22][76] - The company is focused on maintaining its margin profile despite potential headwinds from tariffs [76] Q&A Session Summary Question: Can you discuss the areas of strength in the Aerospace and Electronics business? - Management noted broad-based strength across both commercial and military sectors, with significant orders in air defense and communication platforms for future years [33][34] Question: What is driving the expected drop in A and E margins in the second half? - Management indicated a mix shift towards commercial OEM and challenging comparisons in the aftermarket, leading to a cautious outlook on margins [36][39] Question: How is the GTF program performing in the aftermarket? - The GTF aftermarket revenues are growing at around 15% this year, with expectations of 30% growth next year, although it currently represents less than 5% of commercial aftermarket sales [40][41] Question: Can you provide insights on the cadence of PFT orders and market trends? - Management reported stable market conditions with some softness in the chemical sector, while areas like cryogenics and wastewater are experiencing growth [46][48] Question: What is the expected impact of the R&D tax changes? - Management anticipates a modest improvement in free cash flow due to R&D capitalization and accelerated depreciation, but nothing significant [60] Question: How does the company plan to improve margins in the PSI acquisition? - Management expressed confidence in achieving significant margin improvements through operational efficiencies and leveraging existing strengths in the acquired businesses [83][85] Question: What is the outlook for the nuclear segment post-PSI acquisition? - The company is well-positioned to capitalize on replacement and new nuclear plant restarts, with strong market opportunities in radiation sensing [113][114]