Oct 28, 2026 earnings call — Supply chain transformation and first cash dividend
Company announced its first quarterly cash dividend of $0.40 per share, payable in December.
Revenue $4.6B (est $4.6B) · EPS $2.21 (est $1.87)
Key quotes
"By year-end, we expect to have doubled the percentage of multisource spend from 2023 to north of 30%."
"Since we reported our second quarter results in early August, our business has generated over $5 billion in incremental customer lifetime wins, bringing our year-to-date total to more than $20 billion on top of the more than $90 billion from the prior 4 years."
"The $500 million, 300,000 square foot space is set to open in late 2028 and will allow us to serve current production and future demand for control systems technologies."
Analyst Q&A 8
supplier output timing and bearings
Q (Kristine Liwag · Morgan Stanley): How much visibility do you have into supplier KPIs and when will organic growth accelerate? Also, why not bring on more established (possibly pricier) bearings suppliers and where are you on that process?
A: Management said they now have more visibility and transparency from the roughly 10 constrained suppliers and are seeing supplier KPIs improve versus prior quarters. They expect supplier output to build quarter-over-quarter from the fourth quarter of 2026 through 2027. Bearings remain the most constrained commodity, but a second supplier is ramping now and a third supplier is planned to come online in mid-2027.
"What we expect is that the supplier output will continue to build quarter-over-quarter from the fourth quarter of 2026 throughout the year of 2027." — James Currier (CEO)
OEM fulfillment and defense allocation
Q (Robert Stallard · Vertical Research Partners): Are you closing the gap to meet OEM customers' needs, and is there risk to OEM build rates from your supply issues? Follow-up: by prioritizing the Pentagon and deferring exports, do international defense customers have alternatives or must they wait?
A: They said they are deeply aligned with every OEM and are prioritizing OEM fulfillment so production lines are not impacted; as supply improves they can reallocate parts back to the aftermarket. For defense they are allocating more to national security and domestic primes, deferring some international supply, but international defense orders remain strong and the defense order book is growing double digits.
"As you know, as we get more supply, we are focused on OEM fulfillment versus aftermarket fulfillment to ensure that the production lines are not impacted as a result." — James Currier (CEO)
commercial aftermarket timing and mix
Q (Kenneth Herbert · RBC): Can you give finer detail on the 1-point timing benefit in the quarter and the 2% commercial aftermarket growth split between commercial transport and business jet?
A: They said about 1 point of top-line moved between quarters and that the 2% was driven roughly equally by commercial air transport and business aviation. Orders in commercial aftermarket were up 12% year-over-year, business aviation flight hours were stronger than forecast, and the midsized-to-super-midsize BizAv segment they serve is growing faster than the broader market.
"We had about 1 point of top line kind of move from 3Q to -- or excuse me, from 4Q to 3Q that shifted and drove a little bit of growth, as we mentioned, up 2% for commercial aftermarket." — Joshua Jepsen (CFO)
electronics supply health
Q (Scott Mikus · Melius): Are there any new issues in the electrical/electronics supply chain (memory, semiconductors, rare earths) that could affect Q4 or the ramp into 2027?
A: They said they are aware industry lead times for some electronic components have increased, but they have not seen a material impact to their operations. They apply the same detailed supplier focus to electronics (down to printed circuit cards and boards) and are planning to ensure supply to support strong Electronic Solutions demand, where orders rose strong double digits.
"But we have not seen any material impact to our operations." — James Currier (CEO)
2027 growth and investments
Q (Myles Walton · Wolfe): Can you flesh out the expected rate of acceleration in 2027, what P&L investments mean for margins, and the CapEx profile?
A: They said it is early in the process but they expect multiple supply actions (bearings, complex machining, castings/forgings, multi-sourcing) to layer and increase output, with many benefits visible by mid-2027. On margins, higher volumes and pricing momentum should help, but mix (OE and defense precedence) is a headwind and they will continue investing in innovation and productivity; CapEx will include spending to update tools and add capacity.
"So I think those -- all of those things help grow output at a higher rate in '27 as we step forward." — Joshua Jepsen (CFO)
normalized margins and Arizona CapEx funding
Q (Sheila Kahyaoglu · Jefferies): What should normalized margins look like as you exit 2026 and head into 2027? And will the $500 million Arizona facility be funded from free cash flow or Department of War support?
A: They said a reasonable jumping-off point is mid-23s percent margin exiting the year after adjusting for some one-time items; tariffs explained about 110 basis points of 3Q margin and mix is a headwind into Q4. On the Arizona project, it is planned to fulfill wins across commercial and Department of War products, will add capacity and vertical integration, and they are working through financing but expect to fund investments from strong cash generation while also considering Department of War framework support for portions of the work; the project ties to about $15 billion of Control Systems wins.
"If you adjust some of the onetime things we saw 2Q, 3Q, that's more or less where we're operating." — Joshua Jepsen (CFO)
incrementals, investments, and margin path
Q (Seth Seifman · JPMorgan): On 2027 incrementals being lighter than the 30% average, did you mean versus reported or adjusted numbers? Is margin expansion expected as supply and execution improve, or is this a qualitative view?
A: They said the path to 2030 is not linear and near-term investments to drive output will carry costs, depreciation and OpEx even if high-return. They remain confident in the long-term targets, but these investments and supply-chain actions will depress near-term incrementals; management noted that limited output this year increased past-due backlog and cost them roughly 4 points of growth.
"I think the near term and maybe highlighted even further the need -- the things we can do today to invest to drive growth I think, are both going to be high return and quick payback." — Joshua Jepsen (CFO)
mix effects and pricing resets
Q (David Strauss · Wells Fargo): Did you mean OE will outgrow aftermarket or that supply recovery won't fully make up this year's shortfall? Also, where does the repricing opportunity stand and how far along are you?
A: They said it is a combination: OE growth and defense growth will both push mix toward OE and defense, and incremental supply recoveries will come in steps that also affect mix. On repricing, they will not give specific percentages but said expiring long-term OE agreements create opportunities to reset pricing to current cost levels; negotiations are progressing as expected and benefits should start showing in 2027 and more in later years.
"These new agreements will help alleviate some of that pressure over time." — James Currier (CEO)