Oct 22, 2026 earnings call — Record income and rising aerospace bookings
Record first quarter operating income of $196.4 million, up 28% year over year.
Revenue $0.8B (est $0.8B) · EPS $3.25 (est $3.04)
Key quotes
"As I mentioned earlier, the aerospace distribution and structural submarket bookings were up 23% sequentially and 49% year-over-year."
"I can tell you that price continues to increase quarter over quarter."
"The record results were driven by productivity improvement disciplined mix management and continued realization of pricing actions."
Analyst Q&A 9
Why Q1 missed guidance
Q (Andre Madrid · US Bancorp BTIG): Analyst asked if maintenance explained the weaker Q1 and what other factors drove the miss.
A: Management said the result was essentially in line with guidance, only about a couple million dollars off. They said the shortfall could be as small as one customer unable to ship on the last day, and there is no long list of issues.
"Mean, the result was about 98% to 99% of the guidance that we gave." — Tony R. Thene (CEO·CHAIR)
Demand, pricing, productivity outlook
Q (Gautam Khanna · TD Cowen): Analyst asked if demand, pricing, and conviction for 2027-2029 were unchanged, and asked about productivity/capacity unlocking, maintenance seasonality, and capital allocation (buybacks).
A: Management said the outlook has improved versus a quarter ago: demand, pricing, and confidence for 2027–2029 are stronger. They said productivity gains are coming from multiple areas as they remove bottlenecks, preventive maintenance is typical for the September quarter and will continue but likely not as large, and they will keep funding brownfield projects and remain active in the repurchase program.
"My outlook on demand is stronger than it was a quarter ago." — Tony R. Thene (CEO·CHAIR)
Backlog and LTA share/volume
Q (Scott Deuschle · Deutsche Bank): Analyst asked how backlog compares to the start of the year, whether brownfield capacity is contracted out, and if LTA share or volume commitments are changing.
A: Management said backlog is continuing to increase across end uses. They said they do not contract specific equipment to customers and that brownfield volume will be absorbed as it comes online by current LTAs, which want more material; volumes are higher while share percentages are expected to remain about the same.
"All of our LTAs, they will be wanting more material." — Tony R. Thene (CEO·CHAIR)
Structural inventories and defense orders
Q (Joshua Sullivan · JonesTrading): Analyst asked about inventory levels in the structural distribution submarket and about near-term urgent defense order flow.
A: Management said most customers in the structural submarket report decreasing inventories, which explains increased bookings and implies bookings must keep rising. On defense, they said demand is significant but orders are constrained by budget and funds flow in the supply chain, and once budget clarity arrives there will be a rush of orders.
"Well, Joshua, I will tell you this, that the majority, if not all of the customers in that submarket are reporting decreasing inventories." — Tony R. Thene (CEO·CHAIR)
2027 guide vs current activity; working capital
Q (Bennett Moore · JPMorgan): Analyst asked how structural activity and defense dislocation compare to the assumptions in the FY2027 guide, and why working capital use was larger even though free cash flow guide was maintained.
A: Management said there is upside versus the assumptions used for FY2027 in volume, productivity, and pricing. The CFO said the working capital use was largely timing: inventory was built in Q1 and will be burned off as more operating days occur later in the year, capex may be higher in the second half, and cash flow should accelerate in Q2 and further in the back half.
"Based on that f y 2027 guide, I believe that there is upside in volume productivity, and pricing versus the assumptions that we used when we gave that guidance 3 months ago." — Tony R. Thene (CEO·CHAIR)
Price vs volume mix; medical and energy
Q (David Strauss · Wells Fargo): Analyst asked whether Q1 revenue upside was driven by price or volume, specifically on aero, and what was seen in medical and energy end markets.
A: Management said price continues to increase quarter over quarter and recent LTAs are higher priced; they declined to provide volume details. They said they do not have a volume problem overall though product mix can cause operational shifting; medical should continue to increase, energy IGT is strong, and small oil and gas activity is beginning to come back.
"Well, I can tell you that price continues to increase quarter over quarter." — Tony R. Thene (CEO·CHAIR)
LTA mix trending; engine aftermarket
Q (Andre Madrid · US Bancorp BTIG): Analyst asked if LTA mix should start trending upward to lock in favorable pricing, and followed up about engine aftermarket demand given concerns like higher fuel costs.
A: Management did not directly answer the LTA mix trend in this exchange. On the engine aftermarket, management later said they have never seen a drop-off and have not heard concerns from customers.
Engine aftermarket demand (follow-up)
Q (Andre Madrid · US Bancorp BTIG): Analyst asked specifically what the company is seeing in the engine aftermarket that supports confidence that demand will persist despite concerns.
A: Management said they have never seen a drop-off in the engine aftermarket and have not heard that concern from any customers. They acknowledged negative sentiment in the market but said their customer conversations do not reflect a decline.
"We have not seen it, and we have not heard that from any of our customers." — Tony R. Thene (CEO·CHAIR)
Levers to beat 2027 targets; SAO margins
Q (Chuck Minervino · Susquehanna): Analyst asked for more detail on actions and projects that could exceed operating income targets for FY2027 and asked about SAO margin outlook and levers to expand margins.
A: Management said three buckets could drive upside versus the FY2027 guide: volume (pent-up defense and broader aerospace ordering), pricing (higher LTAs), and productivity (including AI-driven gains). They said SAO margins will also be driven by higher volume, pricing tailwinds, and productivity; higher utilization raises margins though quarter-to-quarter variability can occur due to maintenance.
"All 3 of those buckets Chuck, are going to contribute to us potentially beating that FY 2027 guidance." — Tony R. Thene (CEO·CHAIR)