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01/11 03:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong positive factors: raised full-year sales and earnings guidance, aerospace segment growth, and a strong outlook for LEAP and GTF aftermarket growth. While industrial sales are expected to decline, the overall sentiment is positive with optimistic guidance and shareholder return plans. The Q&A session supports this with no structural barriers to margin improvement and confidence in aftermarket growth. The raised guidance and positive outlook for key segments suggest a likely stock price increase.
Annual Revenue Exceeded $3.5 billion for the first time, a 7% increase year-over-year. This growth was driven by strong performance in both business segments, Aerospace and Industrial.
Aerospace Sales Increased 14% to record levels with margin expansion of 290 basis points. Growth was driven by strong performance in defense OEM and higher-than-expected commercial services demand.
Industrial Sales Grew approximately 10%, excluding China on-highway sales. Growth was supported by double-digit increases in oil and gas and power generation, and high single-digit growth in marine transportation.
Adjusted Earnings Per Share Increased nearly 13% year-over-year to an all-time high. This was achieved through strategic focus and operational improvements.
Net Sales (Q4 2025) Totaled $995 million, a 16% increase year-over-year. Growth was driven by strong performance in both Aerospace and Industrial segments.
Aerospace Segment Earnings (Q4 2025) $162 million, with margins expanding 520 basis points to 24.4% of segment sales. Improvement was driven by strong price realization and higher volume, partially offset by strategic investments and inflation.
Industrial Segment Earnings (Q4 2025) $49 million, with margins expanding 330 basis points to 14.6% of segment sales. Growth was driven by price realization and higher volumes, partially offset by inflation and strategic investments.
Free Cash Flow (2025) $340 million, slightly down from $343 million in 2024. The decline was due to higher capital expenditures, partially offset by higher earnings.
Capital Expenditures (2025) $131 million, up from $96 million in 2024. The increase was driven by investments in automation, production improvements, and land purchase for a new facility in Spartanburg, South Carolina.
Aerospace Sales: Increased 14% to record levels with margin expansion of 290 basis points. Defense OEM and commercial services demand contributed significantly.
Industrial Segment: Delivered 10% growth excluding China OH, with notable growth in oil and gas, power generation, and marine transportation.
Electromechanical Actuation Business: Acquired new capabilities including Airbus A350 horizontal stabilizer trim actuator products, marking the first direct supply contract to Airbus.
Aerospace Market Expansion: Won a competitive selection to design and deliver A350 wing spoiler actuators, increasing Airbus business portfolio and shipset content.
Industrial Market Expansion: Glatten expansion ahead of schedule, operational by mid-2026, to meet growing demand for data center backup power.
Automation Investments: Focused on high-turnover, repetitive tasks, and high-applied-force jobs to improve safety, quality, and productivity.
Supply Chain Optimization: Progress in stabilizing supplier network and improving supplier quality and delivery.
Strategic Investments: Increased capital allocation for organic growth, including automation and Spartanburg facility.
New Facility Construction: Broke ground on Spartanburg, South Carolina facility for advanced manufacturing, including A350 spoiler production.
Commercial Aircraft Delivery Rates: Lower-than-expected delivery rates, including impacts of destocking of some components and systems, could affect revenue growth.
Supplier Performance: Ongoing supplier performance shortfalls, despite some progress, could disrupt operations and delivery schedules.
Trade and Tariff Uncertainty: Uncertainty in trade and tariffs contributed to unexpected order surges, which could lead to demand volatility.
China On-Highway Sales: Reduced demand in China on-highway sales negatively impacted industrial segment earnings and sales volume.
Inflation: Inflationary pressures affected margins and required price realization efforts to offset costs.
Strategic Investments: Planned strategic investments in manufacturing capabilities and automation could strain short-term financials.
Power Generation Growth: Muted growth in power generation sales due to the divestiture of the combustion business.
Advanced Purchases: Advanced purchases by customers in 2025 may lead to muted growth in commercial services in 2026.
Defense Services Timing: Lumpy timing of defense services sales could create revenue unpredictability.
Capital Expenditures: Increased capital expenditures for automation and facility expansion may reduce free cash flow in the short term.
LEAP and GTF repair revenue: Expected to surpass legacy repair revenue in late calendar 2026 or early 2027.
A350 wing spoiler actuators: Production scheduled to start in late calendar 2028, increasing A350 shipset value to approximately $550,000.
Spartanburg, South Carolina facility: Construction project underway, intended to be operational for advanced manufacturing, including A350 spoiler production.
Glatten expansion: Ahead of schedule, expected to be operational by mid-2026 to meet growing demand for data center backup power.
Automation investments: Continued investments planned for 2026 and beyond to improve productivity and reduce labor demand.
Aerospace OEM orders: Prepared for increased orders as aircraft manufacturers stabilize and increase production rates.
Commercial services MRO growth: Prepared for growth as legacy aircraft continue to fly longer and more LEAP and GTF engines enter maintenance cycles, though topline growth expected to be muted compared to 2025.
Industrial segment demand: Ready to meet sustained demand across transportation, power generation, and oil and gas markets.
2026 sales growth: Expected to grow 7% to 12% at the consolidated level, with Aerospace sales growing 9% to 15% and Industrial sales growing 5% to 9%.
Adjusted earnings per share for 2026: Expected to be between $7.50 and $8.00.
Adjusted free cash flow for 2026: Expected to be between $300 million and $350 million.
Capital expenditures for 2026: Expected to be approximately $290 million, including $130 million for the Spartanburg facility and investments in automation and ERP upgrades.
Dividends paid in fiscal 2025: $65 million
Dividends and share repurchases planned for fiscal 2026: Between $650 million to $700 million
Share repurchases in fiscal 2025: $173 million
Completion of previous share repurchase authorization: $600 million program completed more than 1 year ahead of schedule
New share repurchase program: Authorization of up to $1.8 billion over 3 years
The earnings call indicates strong positive factors: raised full-year sales and earnings guidance, aerospace segment growth, and a strong outlook for LEAP and GTF aftermarket growth. While industrial sales are expected to decline, the overall sentiment is positive with optimistic guidance and shareholder return plans. The Q&A session supports this with no structural barriers to margin improvement and confidence in aftermarket growth. The raised guidance and positive outlook for key segments suggest a likely stock price increase.
The earnings call presents a mixed picture: strong aerospace performance and strategic partnerships (e.g., Safran deal) are positive, but industrial sales decline and lack of specific guidance on key financial metrics (e.g., CapEx spend) create uncertainty. Management's reluctance to provide details on some aspects adds to the neutral sentiment. The positive impact of the aerospace segment and strategic initiatives are offset by industrial challenges and guidance ambiguity, leading to a neutral stock price prediction.
The earnings report showed mixed results: record high revenue and positive developments in the Aerospace segment, but challenges in the Industrial segment and China on-highway sales. The Q&A revealed concerns about trade tensions and vague management responses, which could weigh on sentiment. Shareholder returns through dividends and repurchases are positive, but the lack of strong guidance and potential risks from global recession and currency fluctuations temper the outlook. Overall, the stock is likely to remain stable within the neutral range.
The earnings call presents mixed signals. Strong performance in the Aerospace segment, with record earnings and margin expansion, is a positive indicator. However, declines in Industrial segment sales and cash flow are concerning. The Q&A reveals uncertainties, especially regarding China On Highway sales and management's vague responses. Shareholder returns and defense growth are positives, but the lack of clear guidance and challenges in China suggest a balanced outlook. Without market cap data, the overall sentiment is neutral, with no strong catalysts for significant stock price movement in the next two weeks.
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