ESCO Technologies Inc.

Welcome to the first quarter, 2025, ESCO Technologies earnings conference 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 advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being 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 hand the conference over to our first speaker today, Kate Lowry, Vice President of Investor Relations. Kate, you now have the floor.

Thank you. 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 filed in an exhibit to the forms 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 and thanks everyone for joining today's call. Our year got off to a great start in Q1 with continued momentum across our served markets and strong execution by our teams driving positive results across our businesses. Before getting into details about the business, I do want to take a moment and say thank you to our employees for their ongoing efforts. Our company consists of over 3,000 team members and our success is not possible without their dedication and commitment to our customers around the world. I appreciate everyone's efforts which are clearly paying off. I also want to mention our Southern California based employees who have experienced some unsettling moments over the past month with the major wildfires in the area. While none of our people suffered injury or catastrophic losses, We did have some folks experience evacuation orders and general disruption. We remain focused on supporting our employees as needed, and we appreciate their ability to work through these challenging conditions. Chris will run you through all of the financial details for the quarter, but before we get to that, I want to give you a few comments on each of our segments. Starting with aerospace and defense, we remain very positive regarding the long-term outlooks for these markets. Production rates across both our Navy and aerospace end markets continue to ramp up to meet customer demand. Overall, A&D delivered 20% revenue growth and margin improvement in the quarter. Navy sales were particularly strong as they were up 13 million or 56% over the prior year. Fundamentally, our customers in the commercial aerospace and Navy markets continue to ramp up production, and we are focused on supporting those efforts. Underlying demand in both of these areas is very strong, and we think the outlook remains quite positive for 2025 and beyond. Before jumping to the next business, I do want to quickly address the status of the SMMP acquisition. and the previously announced strategic review of our space business at VACO. On the SMMP deal, as previously discussed, the closing of the transaction is subject to regulatory approval in the U.S. and the United Kingdom. The U.S. closing conditions have been met, and we're now in the final stages of the U.K. government assessment. We've had good dialogue with the U.K. regulators, and we're hopeful that this process will be concluded in the near term. Our current expectation would be to close the transaction in the remaining months of fiscal Q2 or in early Q3. Regarding the strategic review at VACO, first of all, business performance has improved as we've effectively dealt with the challenges from fixed price development contracts. Order input is very good and outlook for the business is improving. The company operates two distinct but related product lines today, Space and Defense. As this review has evolved, we have determined that splitting these two product lines into two separate businesses is not feasible. As a result, we are now in the process of evaluating whether to retain or sell the entire VACO business. This process is moving along well. and we anticipate being able to provide a more definitive path forward by our next earnings announcement in May. Switching businesses now, let's talk about the utility group, which had an outstanding quarter. Our core utility business at Doble delivered double-digit orders and revenue growth and significant margin expansion as they continue to see end market strength related to utilities needing to maintain and extend the life of their existing assets. NRG's revenue was lower in Q1, as we saw some moderation on renewable projects coming off of record revenue in 2024. The market conditions across the utility landscape are somewhat dynamic right now, but we feel strongly that ESCO is well positioned for the long term. We are seeing strong investments from the utilities, while the renewables markets have drifted a bit given the uncertain status of tax incentives put in place by the prior administration. We would expect any softness on renewables to be more than offset by our regulated utilities business on the doable side. The dynamics driving overall power demand remain in place, and as that demand is satisfied, we expect it to result in a positive growth story for ESCO's utility solutions group. Finally, I'll touch on the test business, which had a really strong start to the year, with orders up over 40% and double-digit organic sales growth. As we have discussed in recent quarters, test has been working through some business cycle challenges related to the next phase in wireless development and a complex environment in China. The team has taken the right steps here to protect the business for the long term, and we are seeing some good growth beyond that wireless market. So I would say that the business here has stabilized, and we feel good about our trajectory as we move further into 2025. In summary, 2025 is off to a great start for ESCO with really good performance in all three business segments, which has enabled us to outperform in the quarter, and raise our guidance for the full year. With that, I'll turn it over to Chris to run you through the financial details of the quarter.