Financial Data and Key Metrics Changes - Revenue increased by 21% to $56.7 million, driven by strong performance across end markets [4][15] - Adjusted EBITDA rose by 50% to $6 million, with an adjusted EBITDA margin of 10.7% [4][18] - Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share [18] - Gross profit increased by 15% to $13.5 million, with a gross margin of 23.8% [16] Business Line Data and Key Metrics Changes - Sales to the defense market increased by $8.3 million, driven by project milestones and growth in existing programs [15] - Sales to the energy and process market increased by $2.1 million, or 13%, reflecting strength in aftermarket sales [15] - Aftermarket sales to energy and process and defense markets were $10.8 million, up 11% year-over-year [16] Market Data and Key Metrics Changes - Book-to-bill ratio was 1.3 times, with backlog reaching a record $515.6 million, up 34% year-over-year [5][20] - Approximately 85% of backlog is attributable to the defense market, providing stability [20] - The company expects 35%-40% of backlog to convert to revenue over the next 12 months [20] Company Strategy and Development Direction - The acquisition of XDot Bearing Technologies enhances competitive positioning in high-speed rotating machinery [6] - FlackTek acquisition adds a third core technology platform, aligning with long-term goals of 50% defense and 50% commercial revenue mix [7][8] - The company is focused on disciplined investments to expand capabilities and deepen customer relationships [14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across core end markets, despite some slowing in large CapEx purchases due to macroeconomic factors [13][14] - The company remains confident in achieving long-term objectives of 8%-10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027 [24] - Management emphasized the importance of disciplined execution and ongoing investments for future growth [14] Other Important Information - The company completed significant facility expansions, including a new Navy manufacturing facility and renovations in Colorado [12][13] - The company has a strong cash position of $22.3 million and robust operating cash flow of $4.8 million [21][22] - Tariff impacts are estimated to be between $1 million and $1.5 million for the full year, with minimal impact in the third quarter [17] Q&A Session Summary Question: Demand in defense and CapEx plans - Management indicated that the defense platform remains healthy, with ongoing investments to increase capacity and efficiency [27][28] Question: M&A strategy and future acquisitions - Management stated that while FlackTek adds a third platform, future focus will be on investing in existing platforms before considering new acquisitions [29][30] Question: Pursuing new work from the Navy - Management highlighted the applicability of core competencies in pursuing new opportunities within the Navy [31][33] Question: Growth in existing defense programs - Management confirmed that they are winning additional scope on current projects, leading to increased opportunities [37][38] Question: Book-to-bill ratio outlook - Management reaffirmed that the long-term target for book-to-bill ratio remains at 1.1, despite current performance exceeding that [40][42] Question: Material receipts impact on gross margin - Management explained that material receipts are lumpy and expected to normalize in future quarters [63][64] Question: Testing facilities activity - Management reported that the testing facilities are currently booked for specific production programs, with ongoing discussions for future opportunities [75][76]

Financial Data and Key Metrics Changes - Revenue increased by 21% to $56.7 million, driven by strong performance across end markets [4][15] - Adjusted EBITDA rose by 50% to $6 million, with an adjusted EBITDA margin of 10.7% [4][16] - Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share [16][18] - Gross profit increased by 15% to $13.5 million, with a gross margin of 23.8% [16] Business Line Data and Key Metrics Changes - Sales to the defense market increased by $8.3 million, driven by project milestones and growth in existing programs [15] - Sales to the energy and process market increased by $2.1 million, or 13%, reflecting strength in aftermarket sales [15] - Aftermarket sales to energy and process and defense markets were $10.8 million, up 11% year-over-year [16] Market Data and Key Metrics Changes - Book-to-bill ratio was 1.3 times, with backlog increasing to a record $515.6 million, up 34% year-over-year [5][19] - Approximately 85% of backlog is attributable to the defense market, providing stability [19] - The company expects 35%-40% of backlog to convert to revenue over the next 12 months [19] Company Strategy and Development Direction - The company completed the acquisition of XDot Bearing Technologies, enhancing its competitive position in high-speed rotating machinery [5] - The acquisition of FlackTek for $35 million adds advanced materials and processing as a third core technology platform [7][10] - Investments in capacity expansion and technology are ongoing, with a focus on efficiency and scalability [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in defense and energy markets, despite some slowing in large CapEx purchases due to macroeconomic factors [13][14] - The company remains confident in achieving long-term objectives of 8%-10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027 [23] - Management emphasized disciplined execution and the importance of ongoing investments to support future growth [14][15] Other Important Information - The company ended the quarter with $22.3 million in cash and strong operating cash flow of $4.8 million [20][21] - Capital expenditures totaled $2.8 million during the quarter, supporting capacity expansion initiatives [20] Q&A Session Summary Question: Demand in defense and CapEx plans - Management indicated that defense demand remains healthy, with ongoing investments to increase capacity and efficiency [27][29] Question: M&A strategy and future acquisitions - Management stated that while FlackTek adds a third platform, future focus will be on investing in existing platforms before considering new acquisitions [30][31] Question: Pursuing new work from the Navy - Management highlighted the applicability of their core competencies in pursuing new opportunities within Navy programs [33][34] Question: Growth in existing defense programs - Management confirmed that they are winning additional scope on current projects, leading to more opportunities [39][40] Question: Book-to-bill ratio outlook - Management reaffirmed that the long-term target for book-to-bill is 1.1, despite current performance exceeding that target [43][44] Question: Material receipts impact on gross margin - Management explained that material receipts are lumpy and expected to normalize in future quarters [65][66] Question: Testing facilities activity - Management reported that testing facilities are currently focused on existing backlog products, with healthy pipeline opportunities [75][76]