ESCO Technologies Inc.

Good day and welcome to the Q4 2021 ASCO Technologies, Inc. Earnings Conference Call. Today's call is being recorded. With us today are Vic Ricci, Chairman and CEO, Chris Tucker, Senior Vice President in CFO. And now to present the forward-looking statement, I would like to turn the call over to Kate Lowry, Director of Investor Relations. Please go ahead.

Thank you. Statements made during this call regarding the timing of recovery and growth of our end markets the amounts and timing of 2021 and beyond revenues, impact of COVID and COVID variants, and recovery expected as a result of COVID vaccines, recovery in commercial aerospace, impacts of supply chain issues and cost inflation, adjusted EPS, adjusted EBITDA, cash shareholder value, the timing of Block 5 deliveries, success in completing additional acquisitions, success in integrating acquired businesses, The results of cost reduction efforts and other statements which are not strictly historical are forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws. These statements are based on current expectations and assumptions, and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including but not limited to the risk factors referenced in the company's press release issued today which will be included as an exhibit to the company's Form 8K to be filed. We undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, during this call, the company may discuss some non-GAAP financial measures in describing the company's operating results. Reconciliation of these measures to the most comparable GAAP measures can be found in the press release issued today and found on the company's website at www.escotechnologies.com under the link Investor Relations. Now we'll turn the call over to Vic.

Thank you, Kate. Thanks, everybody, for joining today's call. Before we jump into the details of the quarter, I'd just like to thank our employees across the company for their ongoing efforts to manage the business. There continue to be a lot of challenges to overcome on a regular basis. We're seeing some supply chain issues with delivering cost inflation, as well as the ongoing challenges from COVID. In spite of that, we continue to see great efforts and contributions from everybody across the company, and for that I am very appreciative. Since the beginning of the pandemic, our primary goal has been the same, to provide a safe working environment and protect the health of our employees. We continue to do that now, and we appreciate everybody's efforts to create a safe and collaborative environment at our facilities worldwide. Overall, we're very happy with how we finished fiscal 2021. The fourth quarter showed some stabilization in our overall business, with sales growth from two of the three business platforms and good margin improvement compared to our third quarter results. Cash generation was also strong, and we continue to see benefits from our ongoing focus on a working capital improvement. Chris will get into some of the financial details in a few minutes, but I wanted to start off with some top-level commentary. From a segment perspective, there are several positives to report. Within A&D, we're seeing signs of recovery in commercial aerospace as passenger boardings continue to solidify. More importantly, we're starting to see some order momentum from this set of businesses. As you saw in the press release, we had nearly 30% order growth compared to the prior year fourth quarter. All of our businesses that sell in the commercial aerospace sector saw a nice order improvement in the quarter. We're also seeing good order strength from the military side of the business. Sales to our commercial aerospace customers will still be down in the fourth quarter, but the rate of decline was improved compared to what we saw in the first half of the year. Overall, our Navy and space businesses remain strong and well-funded, but sales there were a little weaker in the quarter, which was mostly a function of a very strong fourth quarter last year by our backhoe subsidiary. Our test business has seen a nice pickup in its overall pace of business. We had double-digit sales growth there in Q4. We also saw order growth of over 30%, some exciting numbers. In the U.S., we have seen some sizable order growth from the power line filter business. These are used in data centers to ensure clean power supply, and we've seen a lot of government activity driving the order increases. We also had a strong quarter in Asia from a top-line perspective and are excited about the prospects there as we move forward. We did experience a little margin pressure test in Q4, definitely seeing some impacts of inflation. We're all very aware of these days. The team that tested is very focused on managing our overall cost profile, and also price execution so that we see margin trends turn around in fiscal 2022. The USG business had an exciting quarter with the closing of two acquisitions. By now, you've all heard a lot about Alta Nova and Phoenix, but we were very excited to get these deals closed. These businesses will strengthen USG for the long term, and we're very excited to have these teams on board with ESCO. The businesses are going through the hard work of integration now, doing a full product and channel assessment to gain proper alignment of the businesses on a global basis. The acquisitions gave the USG business a bit of a top-line boost in a quarter, and we look forward to more of that next year. The underlying business did deliver growth in the Q4, and that was good to see. The core business, the core global business, was a bit up and down in the fiscal of 21, but it really finished the year strong. The NRG business grew 25% for the full year, and the fourth quarter was consistent with that as well. The USG margins were a big part of our 21 story, because the team took actions late last year to reduce costs, and we really saw a good flow through from that throughout the year, and definitely saw it in the fourth quarter as well. Overall, the fundamentals of our portfolio remain strong. We're excited about the outlook for 22. You saw in a press release that we guided adjusted EPS it would give us around 20% growth next year. We feel good about that and are ready for the return of growth after two tough years in a COVID environment. Now I'll turn it over to Chris.