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- **Revenue Surge**: Q2 sales up 14.4% YoY to $455.3M, driven by 38.8% A&D growth (Commercial +21.6%, Defense +73.3%).
- **Backlog Milestone**: A&D backlog hits $1.6B (vs. $940M Q1), targeting $2B by year-end with submarine and aircraft programs.
- **AI Efficiency**: Engineers using AI tools to solve complex problems in minutes, e.g., tribological coupling analysis.
- **VACCO Integration**: Q2 A&D sales include $24.7M from VACCO, with organic growth 22.4%; VACCO margins expected to improve with RBC synergies.
- **Margin Expansion**: Gross margin 44.1%, free cash flow $71.7M, with Q3 guidance for 44.0-44.25% gross margin.
- **Defense Resilience**: No impact from government shutdown; defense programs remain strong.


**【CEO Summary Section】**
- **Revenue Growth**: Q2 net sales of $455.3 million, up 14.4% YoY, driven by Aerospace & Defense (A&D) segment growth of 38.8% (Commercial: +21.6%, Defense: +73.3%).
- **Backlog Expansion**: A&D backlog reached $1.6 billion (from $940 million in Q1), targeting $2 billion by year-end. Key drivers include submarine and commercial aircraft programs.
- **Capacity Expansion**: Investing in marine and aircraft plants to meet demand, with production capacity constrained but expanding quarterly.
- **AI Adoption**: Using AI tools like ChatGPT for engineering problem-solving, e.g., tribological coupling analysis, to accelerate design iterations.

**【CFO Financial Commentary】**
- **Profitability**: Adjusted EPS of $2.88 (+25.8% YoY), gross margin 44.1% (vs. 43.7% last year), free cash flow $71.7 million (119.5% of net income).
- **VACCO Integration**: Q2 A&D sales included $24.7 million from VACCO, with organic A&D growth 22.4%. VACCO margins (~25%) expected to improve with RBC operational synergies.
- **Debt Management**: Reduced term loan by $45 million in Q2, targeting full term loan payoff by Nov 2026. Revolver extended to 2030.
- **Q3 Guidance**: Revenue $454-462 million (+15.1%-17.1% YoY), gross margin 44.0-44.25%, EBITDA ~$145 million.

**【Q&A Highlights】**
- **Backlog Breakdown**: ~$500 million of Q2 backlog growth attributed to VACCO, rest from organic A&D growth (>20% YoY). 90%+ of backlog in A&D.
- **Production Utilization**: Aerospace plants at 100% capacity, adding shifts and capital to expand. Defense programs (e.g., Virginia/Columbia submarines) driving MRO demand.
- **AI Impact**: Engineers using AI for rapid problem-solving (e.g., tribological coupling queries resolved in 30s vs. weeks). No plans to reduce engineering headcount; AI enhances, doesn't replace, expertise.
- **Boeing Contracts**: New airframe contracts expected to improve margins starting Q1 2027, with most shipments after Jan 1 reflecting renegotiated terms.
- **Defense Resilience**: No impact from government shutdown on order flow; defense programs insulated from political disruptions.
- **VACCO Synergies**: Integrating VACCO's West Coast manufacturing with RBC's Southern California plants to boost production rates and margins.


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