ESCO Technologies Inc.

Good day, and thank you for standing by. Welcome to the third quarter 2023 ESCO Technologies earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is recorded. On the call today, we have Brian Saylor, President and CEO, Chris Tucker, Senior Vice President and CFO. And now I would like to turn the conference over to our first speaker today, Kate Lowry, Vice President of Investor Relations. Kate, you may now have the floor.

Thank you. Statements made during this call, 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 except as may be required by applicable laws or regulations. In addition, during this call, the company may discuss some non-GAAP financial measures in describing the company's operating results. A 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 I'll turn the call over to Brian.

Thanks, Kate. Thanks, everyone, for joining today's call. We really appreciate you taking some time to get an update from ESCO this afternoon. Our year has gone really well through the first three quarters, and I'm excited to talk to all of you about that. But before I do, I'd like to take a moment to thank all of our employees. ESCO has racked up a number of strong quarters with impressive top and bottom line growth. Our industries are growing, but it takes a dedicated and capable team to truly deliver on these positive industry trends. It hasn't been easy over the last few years, but our teams continue to show real commitment and dedication. Chris and I had a chance in July to visit most of our operating locations, and it's always energizing to see the teams in action and to witness firsthand the success that they're achieving. The teams across the world are very engaged, and they're winning. So it's fun to be in a strong culture like that. And again, I just want to say thanks to everyone at ESCO for their tremendous effort and support. With that, let me pivot over to the quarterly results. We had a really great third quarter with strong sales and earnings growth. Sales increased nearly 14% in the quarter, with positive trends continuing in most parts of our business. On top of that, we had nice margin expansion, which ultimately led to adjusted earnings per share growth of over 20%. We are very happy with this performance and excited that we have continued to exceed expectations through the first three quarters of FY23. We have over $700 million of backlog now, so the outlook going forward remains positive. We did see orders drop compared to the prior third quarter of last year. Chris will take us through those details in a few minutes, but that's mostly an issue of timing and due to the lumpy nature of multi-year orders for certain parts of our business. Year-to-date, our book-to-bill ratio is over 100%, and we're optimistic about our growth outlook as we look beyond 2023. Before Chris gets into the financial details, I did want to offer some top-level commentary about each of our business segments. Starting with A&D where we had a solid quarter. Sales were up double digit as we continue to see good momentum in the commercial and defense aerospace businesses. The aircraft components business certainly led the growth this quarter for A&D. The teams executed very well, but this continues to be the part of our business with the most challenges from a supply chain perspective. This continues to constrain the potential growth and contributes to some past new backlog. The teams continue to manage this aggressively, and we're delivering on the growth, but the challenges industry-wide persist. Orders for aerospace and defense were down in the quarter, but again, that's mostly a timing issue with some large multi-year orders booked in Q3 of the prior year. The outlook here remains solid, with Navy, commercial, and military aerospace all expected to drive future growth. Next up is the utility group, which had a really great quarter. Revenue growth was up over 30% in the quarter, and adjusted EBIT dollars grew by more than 50%. This business has seen a nice burst of growth in 2023. The core utility customer base continues to invest in their infrastructure, and we're seeing broad growth across all of our product lines with protection testing, condition monitoring, and offline testing all delivering good growth. On the renewable side, growth continues to exceed even our expectations. 2023 will be a phenomenal year for NRG. The Inflation Reduction Act has provided long-term visibility for renewable infrastructure build-outs, and our USG teams at both Doble and NRG are beginning to see benefits from that activity. On the supply chain side, we've seen a big improvement at USG, and while our backlogs are elevated, very little of that is past due. Finally, I'll touch on the test business where we saw a sales decline again in the third quarter, which was in line with what we described during our last conference call. We've seen flattish results domestically as growth paused over last year's strength from power line filters and test and measurement projects. Additionally, we've seen continued weakness in China, where business was significantly impacted as the economy opened back up after the pandemic. Unfortunately, we have not seen business pick up much since that time. The team here continues to do a great job, and they increased our EBIT dollars in the third quarter despite the lower sales volume. This is good performance. and positions us well to capture additional growth as these markets start to recover in the future. So to summarize, I would say it's been a great nine months to start 2023. It puts us on a good path overall as we drive to deliver on our targets for the full year, which we are increasing again this quarter. So now I'll turn it over to Chris to give some more financial highlights on the third quarter.