ESCO Technologies Inc.

Good day, and thank you for standing by. Welcome to the third quarter 2024 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'll need to press star 11 on your telephone. You'll then hear an automated message advising 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'd like to hand the conference over to our first speaker today, Kate Lowry, Vice President of Investor Relations. Kate, you now have the floor.

Thank you. Statements made during this call, which are not strictly historical, are forward-looking statements within the meaning and 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 and 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 are happy to... provide an update on a lot of the exciting things that are happening here at ESCO. We are pleased with the third quarter results and are particularly excited about the continued momentum across all of our business platforms. Order growth in the quarter was substantial and we have record backlog of nearly $890 million as of June 30th. This is an important indicator of the continuing strength of our end markets and our formidable competitive positions. Before talking about the businesses, I want to briefly highlight some additions to our board of directors. We are fortunate to bring two highly capable individuals with deep backgrounds in the utility industry onto our board. These additions to the board will become effective upon approval of the Federal Energy Regulatory Commission. First is Penny McClain-Conner, Penny is an operating executive with Eversource Energy, a utility holding company based in New England, where she currently serves as executive vice president of customer experience and energy strategy. Penny is a registered, licensed professional engineer and has held several positions with increasing responsibility in the utility industry since 1986. In that time, she has worked for Tampa Electric, Duke Energy Corporation, and Eversource. We are also adding David Campbell to the board. David is currently president, CEO, and chair of Evergy Incorporated, a public utility holding company headquartered in Kansas City, Missouri. David has held several executive positions at a number of electric and integrated energy companies in Texas, as well as an independent energy resource and investment company. Prior to that, David worked for nine years at McKinsey & Company, the last four of which he served as a partner. We are thrilled to bring Penny and David onto the board. Both have deep utility industry insight, and it goes without saying how important that will be for us at ESCO as we continue to grow our utility solutions group. Penny and David attended our board meetings last week, and it's clear that they will be great contributors. We have a diverse set of industry and business experiences on our board, and their guidance, insight, and governance are key to ESCO's success. On behalf of the entire board, I'm happy to extend a warm welcome to Penny and David. Chris will run you through all of the financial details for the third quarter, but before that, I want to give you a few comments on each segment, starting with aerospace and defense. We continue to have a strong outlook here. As you saw in the release, we finished the quarter with record backlog driven by significant order increases. The order growth was driven by continued strength from commercial and military aerospace, as well as the continued strength of our Navy orders at VACO and Globe. The underpinnings for the market strength here are well documented, and we remain very positive on the long-term outlook for these markets. The key for us going forward will be to focus on execution and meeting customer requirements as we work to support ongoing production increases. Before moving on, I do want to address the space business at VACO. As you saw in the release, we will be reviewing strategic alternatives for this business. Just to frame it up for you a bit, our VACO subsidiary is comprised of two key businesses, Space and Navy. The space business has a 70-year legacy in this market and continues to be a key supplier on many manned space flight and government satellite missions. The business has a great legacy, a tremendous group of committed employees, and a great set of technologies. The space business will continue to have a bright future in these NASA-centric missions. For ESCO, this business has sales of approximately $55 million. And we first need to decide how a carve-out from the Navy business would work. And second, we need to decide if it has enough scale as part of ESCO or whether it would be better suited as part of a different enterprise that's more broadly focused on space. We are undertaking this review process now, and we'll make further comments when the review is completed or when we have determined that a disclosure is required or deemed appropriate. Next up is our utility group, where the outlook continues to be bullish. The sales growth here was a bit more modest in the third quarter, but order growth was significant and backlogs are at healthy levels. You'll recall that the third quarter of June last year was an all-time record orders level for our renewables business. So that business did see an orders reduction compared to last year's third quarter, but the absolute level of orders at NRG in the third quarter 2024 was still the second highest on record. We still feel great about the renewables business, and our core utility market business from Doble delivered significant orders growth in the quarter and continues to see lots of opportunities for future growth. Finally, I'll touch on the test business. As we discussed last quarter, we got off to a tough start this year for the business with significant revenue and profitability declines in Q1. It's never fun to go through these kinds of business cycles, but the test team has responded and continues to manage well through this business cycle. Importantly, we continue to see nice sequential improvements here in both sales and margins. The business delivered adjusted EBIT margins of 16.6% in the quarter, which on a historical basis is very good. It's a real testament to the hard work by the team and shows that the margin benefits anticipated from the MPE acquisition are coming through. As we have stated before, this business has broad test and measurement capabilities that will apply to a number of end markets, and we certainly expect growth to return in 2025 and beyond. With that, I'll turn it over to Chris to run you through the financial details of the quarter. Thanks, Brian.