Moog Inc.

Hello, everyone. Thank you for joining us and welcome to the Moog Inc. Second Quarter Fiscal 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Aaron Astrakhan, Director of Investor Relations and Financial Planning and Analysis. Aaron, please go ahead.

Good morning, and thank you for joining Moog's second quarter 2026 earnings release conference call. I'm Aaron Astrakhan, Director of Investor Relations. With me today are Pat Roach, our Chief Executive Officer, and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental slides, both of which are available on our website. Our earnings press release, our supplemental slides, and remarks made during our call today contain adjusted non-GAAP results. Reconciliations for these adjusted results to GAAP results are contained within the provided materials. Lastly, our comments today may include statements related to expected future results and other forward-looking statements, which are not guarantees. Our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEC filings. Now, I'm happy to turn the call over to Pat.

Good morning, and welcome to our earnings call. We delivered an outstanding second quarter. We achieved double-digit revenue growth relative to prior year, our second highest revenue on record, with strength in all segments. We set records for both total and 12-month backlog with 12-month backlog of 33% from the prior year. We also delivered record adjusted earnings per share due to our strong growth and improved adjusted operating margin. Demand is strong. The business is executing well and we're delivering ahead of our guidance. We are continuing to see the effect of a structural shift in the defense market and we're well positioned to meet that growth. Our focus on operational simplification ensures that we can deliver on that growth and continue to meet customer commitments. Our results are reflective of continuing success in driving both improved operational and financial performance and we're confident in our ability to deliver for the rest of the year. Now let's turn attention to end markets and the macro environment, starting with defense. The Middle Eastern War has further increased the need and urgency to boost US defense industrial manufacturing capacity. This has resulted in increased spending requests by the administration and alternative procurement strategies to align resources within the industry. We are actively partnering with the crimes and agencies to respond to this urgent and growing need. For example, production rates on key missile defense programs are anticipated to increase by factors ranging from two to four times over the next few years. For our part, we continue to invest in expanding our capacity and are well positioned to respond and deliver increased production output. Moving to commercial aerospace, customer demand remains strong, with clear and consistent signals of increased production rates. We are confident in our customers' growth. Our production plans support those customers' near-term needs and longer-term goals while judiciously managing inventory growth. On the aftermarket side, higher fuel costs may result in a shift to more fuel-efficient aircraft and a reduction in some operating routes. Despite this, we are confident that our platform exposure and strong aftermarket position will support our current plan. Finally, within industrial markets, we see continuing stability with no discernible impact from the Middle Eastern war at this point. Backlog is firm relative to prior quarter. We see further strengthening of data center cooling pump demand. Overall, end market conditions across the board continue to be very favorable for our business. Now turning attention to the three leadership priorities that guide our work, customer focus, people, community, and planet, and financial strength. It was inspiring to see the successful launch of Artemis II and the safe return of NASA astronauts after traveling around the moon and back. MoC played a key role across the Artemis II mission, with launch platform gantry actuation, thrust vector control on all stages of the SLS rocket, and critical life control systems in the Orion spacecraft. We are proud of our innovation has supported manned space exploration on Mercury, Gemini, Apollo, Space Shuttle, and now Artemis missions. Back on Earth, we are pleased that two important customers have recognized unique contributions we make to their business. We received Embraer's Supplier of the Year Award for 2025 recognizing consistent operational execution and technical collaboration on mechanical systems. We also received General Dynamics Land Systems Supplier of the Year for Technology and Innovation Award for 2025. Our technology leadership to solve our customers' most difficult technical challenges and our focus on operational excellence always ensuring we meet our commitments as built through long-term partnerships. Our customer's demand is strong and rising. We are proactively investing in capacity and capability to meet the increased demand. This includes robust investment in facilities, manufacturing equipment and automation, and supplier resilience. It also includes the onboarding and upskilling of talent to support next generation production. Across each segment, we are simplifying, optimizing, and driving productivity improvements to systematically reduce lead times, increase throughput, and ensure readiness for further growth. We will continue to invest in our organic growth and partner with customers in the US and the US government to ensure that we are ready to deliver at higher production rates. Now turning to people, community, and planet, we're committed to developing our high performing and engaged workforce through targeted leadership development, strategic workforce planning, and global talent initiatives that accelerate skill building and succession readiness. Our collaborative efforts extend beyond our walls as we've actively strengthened local community engagement by increasing the level of hands-on volunteer efforts globally, supporting education, well-being, and social impact. In parallel, our sustainability efforts are advancing with meaningful projects like rainwater harvesting installations. Together, these integrated initiatives reflect Moab's holistic approach to building a sustainable business that cares for its people, enriches its communities, and protects the planet. turning to financial strength. Our 80-20 mindset is key to simplifying the business. It allows us to focus our commitment of people and investments to the most productive and profitable uses. We're achieving operational improvements, and we are redeploying resources to accommodate new demand. Our portfolio reviews stretch from our operating segments through business units to our individual facilities. We continue to prune the portfolio through licensing, asset sales, and end-of-life decisions. This quarter, we exited the general aviation avionics market with the licensing of IP and a last-time buy for our customers. As we further develop our 8020 capabilities, we're evolving our playbook to reflect the nuanced difference of applying 8020 to our businesses, from industrial businesses with thousands of customers and hundreds of products to aerospace businesses with fewer customers and highly integrated platforms. This learning and refinement are part of increasing our maturity. Now let me switch over to the work we're doing to optimize our balance sheet, specifically the structural improvement in our commercial aircraft business. We're simplifying our global manufacturing and supply chain network and reshaping our supplier relationships. We have made excellent progress on the supplier side in this quarter. We're ahead of our plan in moving suppliers to a more agile demand arrangement, and in that process, we've achieved inventory destocking exceeding our plan. We have also selected a fourth-party logistics coordinator who will assume the management of nearly 30% of our suppliers. These are all transactional suppliers. We continue to drive cycle time and work-in-progress reduction by transitioning to focused factories with fewer non-value-add handoffs between mob facilities or outside services. We use an 80-20 mindset to prioritize the transition required to achieve this. We also invested in a new Philippine facility at Clark to accommodate inbound transitions and vertical integrations to support our focus factory in Baguio for commercial flight control systems. The cycle time impact on parts transferred is substantial. In this early phase, it gives us the confidence that we can continue to optimize the balance sheet. In addition, these transitions release floor space in our domestic, US, defense facilities, which is needed to accommodate growth. These examples highlight our continued progress with 8020, driving productivity and margin enhancement. Our drive to make structural change is also starting to demonstrate operational improvement. Pricing reviews are integral to our business process and continue to happen at all levels in the organization. We are taking actions to mitigate any cost risk arising for the Middle Eastern war. We are also reviewing the evolving tariff landscape, adjusting our mitigation actions as appropriate, and pursuing refunds when available. Our pricing activities are ensuring that we are fairly compensated for the value we create for our customers. Now turning to the full year, we've updated our guidance for fiscal 26 to reflect our excellent performance in the first half and a more positive market outlook. We've increased sales, and adjusted diluted earnings per share, and held adjusted operating margin and free cash flow conversion unchanged. With this updated guidance, FY26 will be a year of solid double-digit year-over-year sales growth, further expansion in adjusted operating margin, even stronger double-digit growth in adjusted diluted earnings per share, and improved free cash flow conversion. This represents substantive achievement against our investor day goals outperforming on sales growth and operating margin, excluding tariffs. And with that, let me hand over to Jennifer for a detailed breakdown on the quarter and our updated fiscal 26 guidance.