The quarter landed slightly ahead overall, not as a clean revenue beat. Adjusted diluted EPS was $3.72 versus a published consensus of roughly $3.61, while revenue was $924 million versus approximately $926 million expected — a modest top-line shortfall but a clear earnings beat.
| Metric | Q2 2026 | Q2 2025 | Change | Published expectation |
|---|---|---|---|---|
| Sales | $924M | $877M | +5% | ~$926M |
| Adjusted operating income | $179M | $160M | +12% | — |
| Adjusted operating margin | 19.4% | 18.3% | +110 bps | — |
| Adjusted diluted EPS | $3.72 | $3.23 | +15% | ~$3.61 |
| Free cash flow | $160M | $117M | +37% | — |
Margins and cash generation supplied the upside. Adjusted operating margin expanded to 19.4%, with improvement in all three segments, while free cash flow reached $160 million and converted at 116% of adjusted earnings (Financial Highlights; Non-GAAP Financial Data). The EPS beat was helped by operating leverage, favorable mix and restructuring benefits, rather than by revenue materially exceeding expectations.
Growth was uneven beneath the headline. Aerospace & Industrial was the strongest segment, with sales up 12% and adjusted operating income up 25%; Naval & Power sales rose 7% with adjusted operating income up 12%. Defense Electronics sales fell 3% and operating income rose only 1%, reflecting timing in tactical communications, even as aerospace-defense demand remained strong (Segment results — Aerospace & Industrial; Segment results — Defense Electronics; Segment results — Naval & Power). That makes the record-order narrative encouraging, but part of the quarter's strength still depends on program timing and mix.
Management raised the full-year outlook, but the increase was measured rather than transformational. The midpoint of sales guidance rose by about $23 million, adjusted operating income by roughly $7.5 million, adjusted EPS by $0.15 and free cash flow by $5 million (2026 Guidance). The sales-growth range moved to 8%–9% from 7%–8%, while the EPS outlook moved to $15.10–$15.40 from $14.90–$15.30. The unchanged Defense Electronics sales range and unchanged commercial-market growth outlook limit the size of the revision.
Net read: a narrow positive versus expectations. The modest revenue miss is outweighed by the EPS beat, unusually strong cash conversion and higher guidance. However, because the guidance increases are small and the stock already carried elevated expectations for defense, aerospace and nuclear demand, this filing improves the earnings picture incrementally rather than resetting it dramatically.
Read the original 8-K on SEC EDGAR ↗