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- **Record Performance**: Q1 FY26 operating income of $153 million, up 31% YoY, with SAO margin hitting 32%, the highest in company history.
- **Aerospace Surge**: Aerospace bookings rose 23% sequentially, driven by 5 LTAs with price increases and Boeing's MAX rate hike to 42/month.
- **Cash Generation**: $39.2 million in cash flow, with FY26 free cash flow guidance of $240-280 million, supporting $400 million buyback program.
- **Expansion Momentum**: Brownfield project on track for late FY27 completion, with FY26 capital spend of $175-185 million.

**【CEO Summary Section】**
- **Record Earnings**: Q1 FY26 operating income of $153 million, up 31% YoY, driven by productivity, product mix, and pricing. SAO segment operating income reached $170.7 million, a 27% YoY increase.
- **Expanded Margins**: SAO adjusted operating margin of 32%, up from 26.3% YoY and 30.5% QoQ, reflecting strong execution and market position.
- **Strengthening Demand**: Aerospace and Defense bookings rose 23% sequentially, with 5 LTAs signed with aerospace customers featuring significant price increases.
- **Pricing Power**: Pricing actions contributed to a 10% YoY increase in sales per pound for aerospace products, despite sequential volume declines due to planned maintenance.

**【CFO Financial Commentary】**
- **Financial Highlights**: Adjusted operating income of $153 million, up 31% YoY. SAO segment margin of 32%, highest in company history. PEP segment operating income of $9.4 million, up 29% YoY.
- **Cash Flow**: Generated $39.2 million in cash from operations, with $42.6 million in capital expenditures. FY26 free cash flow expected between $240 million to $280 million.
- **Capital Allocation**: $49.1 million spent on share buybacks, with $151 million repurchased year-to-date. Brownfield expansion project progressing on schedule, with FY26 capital spend of $175-185 million.

**【Q&A Highlights】**
- **Aerospace Lead Times**: Engine alloy lead times remain extended, with customers accelerating orders post-Boeing MAX rate increase to 42/month.
- **LTA Duration**: 5 new LTAs signed with durations of 2-5 years, reflecting long-term supply-demand imbalance.
- **Defense Growth**: Defense orders up significantly, driven by new programs and FY26 budget expectations. Space business, though small, is growing strategically.
- **Project Timeline**: Brownfield expansion expected to complete late FY27 to early FY28, supporting SAO capacity for high-value materials.

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