ESCO (ESE) 13 May 202020 Q2 Earnings call transcript

Company Profile

Participants

Vic Richey	Chairman and CEO
Gary Muenster	Vice President and CFO
Kate Lowrey	Director of Investor Relations
Robert McCarthy	Stephens
Jon Tanwanteng	CJS Securities
John Franzreb	Sidoti and Company

Call transcript

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Operator

Good day, and welcome to the Q2 2020 ESCO Technologies conference call. Today's call is being recorded. With us today are Vic Richey, Chairman and CEO; Gary Muenster, Vice President and CFO.

And now to present the forward-looking statement, I would like to turn the call over to Kate Lowrey, Director of Investor Relations. Please go ahead.

Kate Lowrey

you. Thank press remarks that on a during be earlier prepared the this release issued will today referenced We call.

during regarding You our can website statements at statement of press of in made forward-looking release and www.escotechnologies.com. Investors find our safe ESCO's a center this call copy the harbor

evolving which response COVID-XX particularly During unknown given circumstances. this statements, impact call, to pandemic to subject of may company inherently the current and the company's the risks these forward-looking the make are and uncertainties,

differ duty may projected refer the measures. to measures forward-looking of results any release those Actual materially does comparable statements most impact in their may press Please forward-looking forward-looking reconciliation from any company for and the non-GAAP not statements. which a GAAP risk to company's financial statements, to and the assume factors any update for

I'll to turn over the Now, Vic. call

Vic Richey

Kate. Thanks,

to as it make as state hand well to a over the light for COVID-XX crisis. comments of I of on few I'll Before the current our future the the Gary second-quarter in financials, company outlook the discuss

earnings Given last changed how with the managing time. unprecedented of the has through months it's business three to this since the world you details I our share we're much important ago, how think call

do the we the felt economic we impacts we took and in businesses, globe started decisive some spread As best: pandemic March, across what did being February action. during and as of our

effectively our to as using we're shown excellence tools and past, all by manage demands. time our challenging to the which actively while precise will These our growth. our market different profitable the ability In actions the continuity. and protect The allow support financial company a storm today's addressing the continuing long-term focus, strong pressures no challenging will is This of we've to financial measures the support have business at and clear to strategy costs us be well-being for we've meet our to operational condition, disposal. secure taken weather to business

beauty cost controlling these communities, current reduction the initiatives quickly our line flexibility cost is with being their and minimal achieve, what is and customers, to on maintaining increase control the up reopen focusing of we're term near for countries our they're future. Bottom implemented economies. as demand ramp losing is The within thereby should our done without and to vision

long-term a with I ESCO with messages investors end going us will strong hope of comments our Number our significant the of balance provides and to nondiscretionary financial health and portfolio our leave three maintain financial through diverse effectively and this support serving to outlook. our growth about continue will wide today markets crisis forward: strong, global clear two, company's to well-being. sheet range liquidity resilience strength allow the and us businesses manage

many team has have in emerge this history. experienced leadership as deep our our we finally, very through Today, extraordinary and we priorities. And will I'm defined And XX-year and an challenges from overcome stronger clearly managed company. even confident a time that

the meet families, safety First and suppliers. by of of needs the employees commitment our and customers to foremost a our is and our health followed and

designed technical today we that help sources. markets difficult to which the from in a various needs, have of customers' highly to developed business makes will positions ESCO support our and niche by will these products of and solutions time. benefit meet it future set Both uncertain replaced our this fact and unique be the leading during alternative secure with specifically

growth. future skilled more communities our drive staff that spending all our to will of to continued and customers' investment as firmly create our segments will opportunities engineering to highly three believe will customers, in our new I returns Our new our and value products recover to long-term talent continue across normal provide rise levels. which

hand short-term I our believe over in navigate our the before and the out we it operating are our to front our COVID-XX, ensuing we of Gary, continued cornerstone close I positioned the be my liquidity as and challenges confident solid business economic well long-term will to approach to comments immediate of fallout face To I'm success. fundamental that us. of

success employees most to hard during for important I around Our are to demonstrated extraordinary you you've asset. say this of want an and our all staff the as leadership teams world to dedication time, And manufacturing employees, commitment trying our their thank and the ESCO. work

it turn I'll to Gary. over Now

Gary Muenster

Thank briefly results, the year. will I'll current year-to-date balance some which on cover today's related then our the view guidance the call we've with to release, our out comments for and the end Vic future I'll you, out operating the share of his press and close Vic. markets. laid QX in And

this our available could in and generated lower of we Vic utmost comments, on where we that coming cash capacity we dry is improve while and extended proceeds sold year million an cash I'm million I $XX carrying over coming. of our out it we economic see position we As business or significantly noted stand the you saw increased crisis challenging gross to wish $XXX additional modest liquidity a Technical our and during XXXX late credit his today of our hand rates; disposal having by debt us facility credit positions. didn't the to and debt between at extremely our I to importance tell time. leverage with at Packaging our pleased $XXX But of in nearly million X-year powder we when ratio capacity, this XXXX when X.XX. by

at bolstered executed a these space in strategy. VACCO. I'm approximately strong A&D million anticipate and normal our these financial we by our Sales segment driven part at have as coupled of financial & liquidity current did sure sales touch a from not glad things the plan. PTI as sales our of increased we they I'll highlights and $XX businesses, growing ahead these as or came aerospace did few XX% were We higher addition $X both by led Defense submarine release. QX QX enhancements million position. X%, pandemic of Aerospace of on the Crissair Globe's with sales

sales as flat issues. three with relatively site access installation coupled result a offset quarter, timing personnel restricted and the February, shutdown the to manufacturing COVID. strong as Chinese sites Test the in where due facility of chamber on were was several our relatively delays week which nearly during of plan sales installation Domestic were

year-to-date, to USG utility from million project of bright sales delivery a domestic down booked realigned in Entered and as ended due several short-term record during protocols large the the $XXX on uninterrupted various their customers, timing start were power business of spending crisis. the deliverables year. March which maintenance focus and $XXX global QX a and where and orders both of we international, is both spot of XX% the backlog were up million, new clearly with to

by Our Class contract winner. on Block the additional DoD V was our led submarines, clear the business, for participation Virginia

free of is quarter. During free was XXXX, considerable global margin improved the which which down from forecasting how introduced resulted it reflecting segment. of COVID-XX EBITDA economic finally, contribution margin a around table QX, million, duration methodologies. we our impact. XX.X% our uncertainty generated from predict conversion despite be XXX% cash is from share, and a $XX has net the which operations to lower makes share adjusted today's earnings flow circumstances, million cash adjusted the of future operations difficult And and of balance QX set normal continuing will of flow the cash $X.XX the $XX with prior $X.XX the from during highest from delivered To extent noted EPS with QX USG, for the slightly the year, QX a in XXXX, which pandemic to using COVID our QX year-to-date affected

our of levers to previously guidance issued this provide on maintain cost not liquidity. for and and and reasonable add our focused withdrawing our uncertainty, some result To on are right we're comments full-year at clearly and we Vic's QX cash cost are savings color a we as optimize to the will actions, pulling all things, this time. guidance flow on And

on increasing the short to do costs negative impacting or term prudently and to in focus focus demand a Our costs deferred future. have in outcome, cut ability our which our meet the growth those is not

it turn Vic. over I'll to Now back

Vic Richey

our part as will frame there across to businesses end markets, situation of unknowns change we our Starting over the see balance to about but with in materially is units. I of many deliveries aerospace commercial our and year. future. Defense our slowdown thorough today better completed operating some I the of various that the of emphasize are segment, April expectations the the in & impact within Aerospace and expect a today's very comments recently planning COVID-XX meetings fluid, our We Gary. will Thanks, individual a qualitative may of so offer my comments review

impact And industry it's passenger relates cycle and to as downturn miles. too airline from the current and in early sales future the to determine it the build rates EBIT

We all the to are requirements quarters, demand our and coming of situation over customers their with working continues a the get evolve better but aerospace of daily. to picture

remain the both backlog platform navy & and its Our Defense, given within deliveries. military Aerospace and expected is contract aerospace strong defense products, to expected urgency current of

necessary Our to services us. parts to continue and chain aerospace partners deliver supply

where other net. back replicate of some a cases products safety working capabilities And such and these can see we in as we we services weakness, bringing machining on some some and in-house, as are

an ESCO. We aerospace also opportunity as did see the this weakness in market for

or operational to this reasonable find through stress acquisition we able or be a assistance at So financial crisis, an during your provide competitors experiencing may about partnering or suppliers we price.

and of business including communications its given of and is XG Our expected over shielding backlog the relatively served its year the related strength solid its and to remain the markets, balance technologies. the of medical strength Test

of continue utility normal certain be more protocols they as sorted USG's to spending money out personnel their distancing near to indefinitely testing without risk customer expect return of that routines, spending regulatory for our cannot buying it spending the visit their efficiency their return on to to patterns. spend, have compliance. normal the I'm guidelines will to Utilities normal safety, and significant come Once We months. out service few or hold get softness we and few delayed creating to return months some been next the as has summer site through as the past return and business essentially future maintenance grid can social service expect in

after new asset in show, and several is products infrastructure especially to On improve crisis. and solutions, cyber The being aging really not pipeline solutions customer from related We hardening Doble conference both there of and security these positive utilities' reduced received. critical the need maintain, a the at enthusiastically pandemic the feedback, this USG's pleased by with introduced and note, to solutions. are related and I'm products March, repair new

to continue Prior on to past. down we'll well evaluate and these a COVID, we to evaluate M&A. the the take actionable other our opportunities to the businesses had -- Moving several path continuing other we actionable will When is on opportunities several to grow deals completion, time to action have we're in we in as the of pipeline. couple right, and

balance of liquidity Our plenty portfolio. Board and strategy provides to is our add allow supportive our with to our sheet existing of M&A to us current us

delivered to the first scenarios opportunities In balance for a to dust workforce, year, of the for the multiple hard summary, work hunker for strong And plans of critical year. look contingency control our while is maintaining settles, and we our half costs infrastructure. our down plan to leverage while develop our

you and answer any We to glad questions I'll will prosper. now have. be survive

Operator

McCarthy with [Operator Instructions] First Robert Stephens. from question of comes line the

Robert McCarthy

talk about forward? to some about maybe you be dynamics the in going is So how that first of cash the strong and the thinking that cited. the should thing of talk Could you about, conversion we quarter,

Vic Richey

Yes.

a get to as clear think, focus we've it's from of up historically. I past, where that ours talked been it's in Rob, percentage the

of We're on also do, And and inventory, is sort easy appropriate So also making vendors doing kind doing collecting things the some things. on are the within sure hold. across-the-board is and some taking initiatives that that. accepting and focus we're of it things you're and early not working to thing the some the timescale, things inventory where side of like receivable which kind of that the are paying on your really things

programs things those the larger the downpayments these side other try minimum. part to -- our of investment contracting So the to of those for win doing ask are the our strategy when I'd of kind negotiating basic things. across it contracts, keep DoD a upfront the is comes world. But we on say of we're some in We're to

-- starting sure we're coming flow so in you've increasing to And some I'm headlines that. where the some in progress see successful payment so out we're seen of some with cases, DoD there from flexibility the in their is that.

it's across really -- And have on don't know, at it's with don't I it's roundabouts. swings know think board, to the I it know, you're sustainable you we're -- you the is. kind think volatility, quarterly I just so, going of because but pleased and XXX%, not ,

going year, decent to think of I the you pretty cash things well, going the back for like depending back XXX%. the to year know, to of at the But as on half half the out in you're not that, and again see relative the you're order conversion the see book year how plays

on. what some starting you're is traction things been So that to working see the on we've

six is And with you here our of seeing some of progress. a battleship – trying and know, thing. we're As ago, to this said, turn sort I months some that customers, we're around

So hopefully, that's helpful.

Robert McCarthy

us mean, tied, start giving dynamics. some you or Because, ultimately it know, whole to little and amplify around the of terms then of, the pretty your obviously, travel and quickly a a we level you bit get And you aerospace it third airline pretty as know, citing business No, just and comfort talk parties, some because scary can you're and is. exposure, exposure movement. comments I about just commercial numbers in your maybe can sizing we

in which So is long path how you environment. important. all? And the it's this just, you that thinking kind in implication terms we this of know, see understand. also we clearly, choppy us for you it just know, do in -- about -- near-term you But what think but quarter, only didn't dynamics Because the how help you're not that, be, could you of

Gary Muenster

Sure.

overall So, our Rob, business. overall, about XX% of it's

things going that me happened not what longer good of is be that XX% in gives to lot if at business with that. So a look still a And comfort term. aerospace of our business associated is know, Commercial you are still go But, after there X. downturn. at going to you what to don't are People travel. to was a XXXX, X/XX, these still after going you People look you happened certainly know, fly.

are things be going these are -- to these over businesses So, time. fine

look overall I some obviously, will. dramatically it the our think driven if to And flight aftermarket, will -- of OEMs. and really by I mean, the well. what's businesses XX% in And it is rest the at near-term as then miles. as about XX% of as it's don't OEMs to is that's is you to level be But impacted aftermarket the the pieces, XX%

we of make some recovery, as far and look that. said on at kind As I history mean, think assumptions to I

years know, going to looks talk You like, people and hear, three it everything I maybe 'XX be to I to, get back they're five it's levels. to to thinking

go this something as people some think XX the know, So, going But turn months. to not you I is next that's don't think. in to around, down as may it's again, far going

way We the I flight That's mean XX%, know it's like -- XX%. XX%. not down not tracks go just the you works. down it

that void. as I of some try for to So, fill what some in we're is statement, opportunities, looking mentioned in-sourcing my do to to doing

will near solid are But So, think businesses. the I those definitely still it in good term. have longer term, an impact

Robert McCarthy

for pushout some behavior there, about USG. this struggles for resources of kind the you for comment release And you do finally, your full amplify then, press comments in on and kind then some just to deployments a -- the quarter that? of of with some there in you in of talked Doble of Could of for or the think power the Could I switching other of about around the now, terms expected? a the the was kind utilities? comment either of And of just me

Vic Richey

Sure.

conservative. So, pretty know, you with utilities, the utility,

what them substations keep right taking we a so, test, all will you a where now do to our buy right? And is is so that remind see would flying, to they will spring flowing, thing kind in them lot do start will most of power the need equipment. important services And they new our equipment, to the they the utilize typically, for of

is it kind done act more like it's what piece jump so that past summertime. And they've a of and of

not service some the they out so of have to been taken And really of work. substations do

they do more then they thing oil take samples. that that, one happens Now when

think this quarter so We can't of visit them up We obviously, we And labs is And come in certainly phone back. lot time to time, not we'll running they're a staying sustainable. our product with difference movement right something now, going start in were the and mean but make enough the is, we're we're everything what to fourth that's spending into have hey, on close next see I a saying to year. over some we're from and service standpoint. very hearing, good the This them. been customers. everything going not but doing is oil to the and

unlike going and testing. type airlines, the unclear, more where to of are have the So it's utilities this little do maintenance to a

we dip it's we business a airline might utility much duration so And see be going think to shorter with business. the in than the what

Operator

be line question from Next of CJS will Securities. coming Jon Tanwanteng with the

Jon Tanwanteng

sale at being also, business the quarter. actually on quarterly first the an press of just refi you action on question, echo your And run How guess, is is all level servicing what rate? that in there was of of still packaging, stuff of Nice services mentioned you that even seeing. on? a minimal mentioned option right we're this pension business I utilities to some nice Gary, big your point? the ahead going not now. to going the Or comments, release, very the that And and X My that job timely on

Vic Richey

million not to to going we're -- still level. they X. nuclears there's of it's I very kind right service huge be it's of as a like their me, and that talking front had areas serviced. our that number were the not business last I business. have don't critical $XX you in I but not mean, to quarter, zero. some piece not has With can the going million but itself, with in saying of $XX certainly to see, even here, And But the performance Gary's to down mean

businesses talk businesses, think X business almost go a to that. So you They careful we our like But people retail they I about dipping. you're have something in unless never, never with -- impacted. when to never. I say they're mean or be won't I

really it's so relative. And

they've mean, property, to but either. So I I bit mean visitors letting to business, we're I back people at our out about people say in not that into champing are. facilities facilities, really just like everybody they're our the come the restrictive would get letting been

So that It service come business is a will dip. certainly taking back.

think will back be fourth it I in quarter. the

In fact, demand we're services to utilities, pent-up hearing that the well. provides as of that companies for some the the of a testing third parties, lot them from some of provide the there's

Jon Tanwanteng

if a to year, running $XX run month million, April, is So how example? $XX at much the in maybe you're the rate of for million

Gary Muenster

mentioned, Vic people as the Again, ratable out, when of across platform. the X/XX seasonality Yes. allowing it's they're not

So at the we're it like they go what they've to in if it's that's $$X Vic it'd today into be then cycle, a as tends when million of million different normal they that. to said, a little be because were And accelerated month. a year, this $X in time profile summer mode, living

million month this of of right $X.X of it softness now, today. you as that at level if we're kind So in the of seeing think where a to that's kind million kind $X

Jon Tanwanteng

question… just maybe And same the then

Vic Richey

this had over I Jon, really Jon, talked two call if a of was we're RFP and one increased the mean I kind seeing. if weeks. the morning, one the -- level mind things past too. could we we add that's about And of I thing,

you RFPs. aren't that's indicative are those know, but I think those So, of, orders,

shotgun when trying So to know if up. ready be a for us start that get there, you a start, will, need things back there's to they're opening people and

Jon Tanwanteng

can't they off. makes put because sense. Right, That

then just rates buffer and seeing you're run there think know, and and on the OEM you April And between a a kind have today end those Okay. should at run seeing, the inventory What side, of of into side the and the split Or of side. question how maybe through March carriers? sales May? beginning in rates you similar the of businesses? maybe aerospace of filtration been the Was we the

Gary Muenster

a thing details you as One of a do, attention us as planning Jon, while, you've we we know, around process. part our to of lot pay been

we one an of keep on things we weekly call that So, what eye shipping is the the reports.

you Monday. out some lay So, volatility, our ship weekly But following it plans on might Friday a versus when know, there's we pretty are obviously plans, shipping generally, the the tight.

obviously, we're know, more lot monitoring so, now. And a that you closely

it's kind And basis a the, $XXX,XXX shortfall. $XXX,XXX looking know, is you on to so of what like weekly in

off of multiples that's of numbers You are know, again, in millions. that and coming the

or you as probably first half. So, know, plan, I had ahead And of now we know, by $X a million you were we're great said, million. behind We $X plan.

you here sitting weeks we're know, QX, thought in behind million for, four be. today weeks You where about $X.X in would five the we know, or we

off said, products. not that to You buy and to know, selling finite get go it's going the so things we of our Vic widgets orders for as beauty X. they is We're shelf. stuff the And not

And today, as here taking customers we they bit requested that you know the had of, sit are little a so lighter. products the --

are There's years. pushouts, the but not months, been weeks some or pushouts

what we're million and so and shortfalls would of I first say, of be. year, the weeks we And all acceleration, this about look on at $X.X go so know, weeks dollars would we're you our so a of basis. short seeing, those of a dramatic the not millions of for to we're plan start know, back of if or each five period, the not And the millions weekly way we seeing you

seven in we're the months because we're spot So into year. beautiful a

suspend headwind, a going going just validated that the not again, the that as flow to it's for yeah, And zero. so it's five it's you gotten. by Vic going continues, next four know, said, to cash all go to we've it's months, deliveries. -- And to not but or if be trend They're

paid product, for So it. not only we getting are we're delivering

sense of think to So kind you. I if helps, all that makes that

Jon Tanwanteng

is entire clear, different? that just just aftermarket? that's say, getting of terms the be is shortfall it business, Or in to that aerospace the us Yes, And does. the

Gary Muenster

On earlier aftermarket, and within the and customers. not an aftermarket. look the our getting at dollar level the XX between sales. comments I shipping, you weekly a split at dollars, OEM We're the really of relationship, know, not I'm XX-XX look it's But is that to Vic's -- side, relative to the so OEM when to split, contribution OEM about you and of and

And building they helps as are just of us build going so still that claims. because to many not They're them.

the are the so And continue. to being Obviously, rates executed at in still We and build to we were we or don't that are slow contracts XX% have to the product know XX% not of going where. deliverables the That's going think plan. just down.

Vic Richey

seeing to I remember it's think only on commercial aerospace. is that type again, And we're place the that the impact of important

And still so defense strong. our sales are

our strong. is sales are Navy still space And strong. Our

have Our sales space been strong.

on So kind we're business. lot ways going bolster of one to that's that to of focused and, look for where to area obviously, we a time spend

Jon Tanwanteng

What's schedule the I if received, The orders boat, timing Black P&L when flowing to for the those last through may. liquidate? out the of backlog? Virginia V one and one, do you Just those

Gary Muenster

it's say, I Yes. would multiyear.

to be build. there calendar at end of because, obviously, of not IV V, on still whole Block will So this They're sales relative the lot front producing. year they're Block a the

contract, lead revenue. part we'll so have this which so And of are year, we'll material some the some get long purchases

probably we'll half in rest over. So neighborhood back million $X you million of over we the that as think the of of booked about V, it deliver to the $XXX it Block somewhere of year, to of carry will if $XXX $X the and of million million

number And backlog ship so over look that when of -- at that XX million of the will $XXX XX% next backlog you to months. and XX%

equates that million. obviously, to so about And $XXX

we Class, has been out and as Virginia in about historical sitting stability. Virginia Globe, back the the features visibility years XX% X is in the it. most these this with getting So on particular, Class duration the one business mentioned contracts, where XX%, being of it's that because the purchased When of is of the goes it long-term to whole and our around XX%, Navy we or is reason attractive the Globe, we're the long-term today then, back at

a really setup. it's So good

Operator

of question [Operator the and John line Sidoti from comes with Instructions] Company. Next Franzreb

John Franzreb

with spend. to I'm as part in far as segment. that have marketplace, the I R&D in Test start spending is like a different I'd discretionary because getting some feedback exact...

Vic Richey

hear I up mean really can't you. you're we John, breaking bad.

John Franzreb

a I'm telling In Others jobs getting that actually spend go getting and people that some great that discretionary segment, continuing the Test orders. are they're it's not are me large through. to

You seem doing Can business of kind is us to be to saying that talk that's case? you the why well.

Vic Richey

still said. I I you, think to you what going quite couldn't but -- I'm I know understand

asked. try that me to let question So ask the you

Just tell me if right I got it or not.

are I you said? that what and are think orders they're people segment. really you are seeing. Test that saying what what telling now was the you pretty Is were Other people some right saying soft of in strong we kind are

John Franzreb

That's summation, good yes. a

Vic Richey

translator, a but yes. be I here, starters Maybe can

different is So, pretty a seen really comes you Test in -- business, there's areas. if really to good it know, you our business. And orders business at look Test And our solid. of we've our down lot

got the we've auditory the boost. So, we have we've got components, the got we've our medical, absorber,

it. of lot straightforward. you a It's there's so know, And pretty,

And it's discretionary. and very really dependable, it's not

you've rock probably solid pretty business given then percent any And XX-plus that so the is got year. of

another So then purchase what that's that over you have piece It not. that. is, on if is you or and depends really know, discretionary above

long-term already that. got for, just the these have chambers in of customers, are so that done. put you built buildings they many we so test our have the They've know, projects And to

level as yet. really And of that variability seen so, of not we've

as I fact, great in here really sit for today, shape we think this In we're year.

opportunities next You year. We've know, got we've got a going good lot for of into next year. backlog

Test lot think I of have just in we the business given a really that markets area. has our stability of in that So, diversity end is the what us

do at that having end And the said will look all -- not the day, of But is cut. using that, it to people and equipment. our I won't customers outside to this Now a that testing. if themselves. now the to And is to of where equipment, capital put then place mean, they're they're some probably of do going flexibility to be have most to capability third-party able this have

John Franzreb

think aerospace in the excess commercial much do inventory for business, is channel you And the how in products? your

Gary Muenster

Say John, you that if again, would.

John Franzreb

the inventory have to through aerospace in burn excess in much channel? do How commercial you

Gary Muenster

on Are that things talking that our like or you end? [indiscernible]. to Or relative are fleets parked

John Franzreb

that built Relative you've been delivered to how yet. much hasn't

Gary Muenster

there going as XX go going a to thing an if to [indiscernible] such product, usually Our on a within we're it's is days. airplane deliver

So, it's not -- in delivering not time. just we're

-- Airbus Monday a to things Tuesday. on don't or Boeing put we gets it's on So ship plane on and

so shipped far, we've what So, know, you utilized. has been

that know, go said content distributors to I so like It either that this until they XX here built, slowdown hear is direct XX sales they somewhere been So weeks. and or them really the of that's you probably is what of out through planes inventory starting and there $X.X for sitting where the their in last we their and between a haven't five function sort we for rates. from, days million build delivery see have -- slowing the down expectations we're timing, that earlier,

That's thing over of So we going be -- a we talking going to little time point, this we're thing our of. and And cease days. backlog all XX that isn't cliff a this be in opposed every We to we're stop prepared a to notice the we to next customers off and see down more as deliveries the anybody. to desist just few relative -- the not hopefully, to for said to We're earlier have what remarks, board not not that received from kind of It's that Vic's goes helps. seeing we're deliveries sliding not days. formal expectations. going to drop have

John Franzreb

that No. business, On and of a utility like service looking or That's turnaround I spring season the of not? seasonal fall, is kind was side perfect, what for.

Vic Richey

a on, was times, on. do because spring, lot earlier power they point they will I to this in make trying There a testing keep to not doing was spring. that is want of the But they're the

anything they offline. So take don't

the So bit we a would see year. time more typically, this little of

certainly is seasonality there business. some So to that

quarter first of some try change year. or year delays they'll think year to going next because fourth the that's think in have of now, pick some this I to quarter underway I up the either this which they

John Franzreb

two your the the COVID? about little change Is the And for based quick spending in think can and capital I there questions, going talk forward? about guess tax any in should just what year And I last you plans quarter on if rate may. we a

Vic Richey

Gary I'll CFOs at And expenditure, to Certainly, we're let people we each of taking then presidents their and a of and look the the are companies then talk plan. go the rate. of everything. hard and each through with asked subsidiary talk rejustify tax capital capital about We go back about meeting to that.

And there So seasoned they're team. to have got a that. going management we rejustify really to

So they details but were going doing the that, them. be we'll through with already

half put put But this buys certainly, looking I mean, that for been our instance, year, of second the on we in we add on one have There of we've to some equipments to starting were plants on hold. hold. that

So I a to that is an that need kind thing of, painless say fairly easy won't we but painless, do.

And cash. doing can so we're to everything conserve we

Gary Muenster

of kind it's at you if look And year, tax side, on last profile. the same the John,

fruition had unusually that that this an to The second thing last year tax they come we same the some quarter, things of strategic works in low because on and second our had rate basically the group quarter year.

rates this if QX, year. rate XX% kind get in it over it the get annual to last be the consistent our in rate to for we're to again, XX% with similar So will were year an on QX have that to the basis, of blended XX% at average. with QX again, the start of probably expectations in at look And to XX% range, XX% or going you or year, to to XX% the

numbers has the was it benefits some like same, of as there year which rate So last and the strategy. same look the

Operator

Instructions]. [Operator

with coming will of line Robert McCarthy the from Stephens. be question Next

Robert McCarthy

Yes.

few first, forecast if at a the I Just guess, may. mean, I COVID, respect, and things. dynamic understand your very given situation at hard these I exposure, I follow-ups, just it's obviously, looking and to overall

have we However, not do that luxury.

that's first lot defense, So certain the would you businesses, obviously, of infinitum, about, ad question been to have I cyclically are space, and Navy talk talked resistant, your can kind guess nauseam, of extent. the a fairly obviously, I ad is, businesses a

we can the obviously, could maybe testing. to of then cyclical among tied cuts of ring-fence that mean the there? so is them. kind more cyclical CapEx Could that we kind using I more pretty defensible. patina, testing we and end you of kind corporations And has we talk But fairly volatility really provide expect aerospace market How see can little a the are some dramatic of there? color kind any in would where Just a see of view. about your utilities in

Vic Richey

looking and very would markets we're and at think today, to I know, we today, gets end lot serving. say, of time I would the that spent really solid. that I this, business is Yes, a it you say

auditory And end then medical, it. on you there, markets testing shielding, the both know, are primary piece into industrial get some shielding. in you And and XG of MRI of the again,

say kind I'd of and good all people that we extendable. there's we of that those so sight, -- business are have lose there, bit say, and that there's very recurring I Also, think instruments a types provide. And of,

to And ratable since you know going pretty every be those sold are every year. approach [indiscernible]

amplifiers, people antennas buying those turn so, tables, things. are they're buying they're buying And types they're buying and of

there So be see this you know, we projects. and fortunately, volatility projects a lot have think next make the numbers out I need for, really, today the the that large large we're year of for And, would don't where what year. you in we for looking to would

more provide those think I upside anything and than else. protection

a right, you're So, testing chamber.

products or anything required testing, content is do only this And One to type to again, to electronic type do They there's of of that electronic again, for two companies options. are have that in-house. this it testing. and have

have most The to other control people test that. to want is house. send to And over a it outside

holiday they're to reason to the products, have of what that's again, year. the are certainly lot they with developing you the moving moving customers. at meet forward. in position look know, so that because later they're the the a they're demand to if mean you those And do some of in forward they a chambers of And the going not be to sell season the doing, now, that, I we year. if at you electronic manufacturers don't And end they're in the sell, end know,

Gary Muenster

to And think kind support we number Vic's that. of add comments Rob, about of how what a kind as I'll around

is at new here's backlog orders March shippable or One XX. track the position which says, called we of the you snow, today what's OK, other have metrics

The runs construction that's track gets know your a so commitment. to do would done say in sales and that, backlog we the You What how ship period? that book meet second-half out. I same metric million it you have to to $XX about year that it to the year, have ship this thing. and what we is, to relative to this million sort $XX book being of relative COVID model despite model, and only your commitments, our And

our year we in meet English what know, XX% means this our you need that basically the of in to is, And so, we stuff already have commitments hands.

take And are, more services $X you that. million is, of antennas kind so, and down When we sell things month, know, a you some kind call of that know, and antennas products for things you normal routine run to that, let's of point and the that like our to and Vic's know, deliveries. to that's the $X.X million of it, rate that like into, what you break off-the-shelf

group countries have every all the delays, we installation with leaders, open to those again, back customers, day that other up. the calls on the And these

particular, opens been when say, guys the of you You in are And, where up, you Then be couple Europe, a those have you? late. site in hell Italy, know, that one months. they can't have down things the We site. of are also two projects it's for shut on

on get it. Let's

great in backlog. see that's what's to there. And is so, going again, already acceleration we're And

commitments. book-to-bill comforting, So, that, have meet our base having knowing XX% million that, ratio to what only do we that's a that today order shippable is of have in like or $XX really something to a we new business Test

Robert McCarthy

other these deals more expectations of on return this might want focus some and out tougher a have M&A folks returned the unlocking market set, because that that to the to limited. I as a divestiture might favorable what get capital, of their of get terms you might people just this But the children, they cash capital balance and capital bounded inward mean, or have position with bid-ask is that very and the difficult like, transacting. episodically, understand or coinage do I there. bound clearly, environment, suggest focus outcome particularly in in deploy private and I or a know an instance, to for heard expectations bolt-ons set strength I then deployment. are you're I places, given about the a in portfolio then, might for M&A deals? of deal, other that overall problem that some the the level they are a time sheet kind some troublesome doing and niche follow-up businesses size of and coming be they be then and would that of for would not the big have of certain, But on a just to as good Obviously, out workouts crazy kind Yes. be your and think. presumably, you're outer seller Maybe of there and where that realm, operations consensus received, properties guess can middle little and for opportunity of part the equity the opposed talk going very for bit buyer the the assets

So was I didn't lead this know environment. that believe could to you if be on that decent going that would a any phenomenon M&A counter-intuitively like perhaps

Gary Muenster

it business. mean some they there sell to a think position I in be going you to people about great are be going think where right of think we mean really are way. to coming I I their this. need the out think opportunities I

position -- going to of be this going where risk Some a wanted they again. they in are don't the have just people through

coming be just do. they where with out people best first opportunities when relationships. to do us because and forward now. start call something, you move maybe they to easier a of lot we've told the and want our got to discussion that conversations those decide close think those to a That's and we all to They we we have this what's having them, they -- identify be So that need of management need so to need teams they people are. They

toughest areas that I been multiple result our very side because will verifying and is on, industry of really going diligence. that to just can where a is of I will different. Every I'd have always the something we have on -- we've other forecasts lot the we diligent thing But think come this, what think as we down participate. say of little bit the about. experts think time But to a we -- it's due I that's a in to are this, spend certainly in be

to can't mean, a a commercial while. understand, going really are I on for build Some murky rates you be aircraft things

we'll every think make lot the into area bad XX and in It's days But based where to assumptions. buy XX and somebody's month sense after a that. that's that have just days have forecast. better I sure don't on we we

lot doing of as So time a spend result. we'll a that

to one big absolutely that. that's comment acquisition. you going go make But time a do right. is made We're not the wrong to This

really there what balance sheet. is out hands want want we size are done be perspective I happy when without have liquidity to to the there. the good a of say I from a for think years I with we're because reason couple good we'll past over position one strong do But maintain of we're we your that be in. that. can looking a in acquisitions think we've that We opportunities putting you mean ourselves can't do we at that also don't on

be So forward very going them to about it have move we're diligent then just sense. diligent to and when those, identifying makes hard,

Operator

Yes.

line Securities. On the is with Tanwanteng Jon CJS

now Your is open. line

Jon Tanwanteng

wondering, I can guess, don't if mentioned And the the was amount. the the what you that quantify actual follow-up, year-over-year maybe aerospace saving you're know one I kind you're looking of so there? I reductions in cost my kind of business? first for you at,

Vic Richey

travel stop some yet. compensation mean, a not we still we're like I We've things. that quantified and put entirely some are just, know, things to, there you --

know, to cut have You have had we force reductions yet. not --

and our what date. that obviously, know, make. firm number think got on we is we have You know, cost to, don't around in decisions to I the But But you to we're that. we've find ways work make hope to can are a reductions

Jon Tanwanteng

for you involved guys the be And may wondering then a filtration there products, you but business? I'm little this if And just back that air purifiers be bit kind are relates demand some out may and second, of in just it into new air filtering hygiene of I part as to there, go space. these cabin or know know, that when stuff, increased plans as

Vic Richey

the that's sat the the people we've the asking Yes, in filtration question -- same the you. as around been kind an I and the four of much really airplanes stew five internally. think is don't on you And the air of of really issue real is as issue or

about COVID you these already, masks? talk -- or what those So are -- the

Gary Muenster

NXX.

Vic Richey

NXX masks.

of So XX%. particles size. the that well you know, XX% are means with they on stopped a are above filters certain that already airplanes, HEPA And the

issue going be So, really on is. the to of proximity people. you where not know, that's It's

they -- to frequently. may going switch them they're out think I more

the material We we is know, each great side don't think sitting we But have first that's you because of for that with us -- a real one person maybe asked the on things of I But thought, the developed things there's – on you. opportunity some here. itself. for anti-bacterial was the issue some well

Gary Muenster

want doing comfort on more that. touting replace the the the notice, HEPA on give really, or last elements, for if to we're and press that. be same airlines back than even if the filtration overly commercial those able the all marketing the they And this to, way. to their they're TV they airlines it. are it of there mindset Jon, They're a them night, cautious saying some you'd get communications and that just to into But I need is and plane. saw they're be to are And the travelers' thinking increasing

Jon Tanwanteng

just XX I close in sight think, were M&A. two you specific maybe And any you that you're future? as within I line if quite and, acquisitions more. last, time to this then on know with were not opportunities of know just into closing, a maybe the update closing, rush near with, going Can before and of those I But in

Vic Richey

time There's at stop market really we're on know, working, and those, put working in a a is was the it. don't slower decided miss you to big still close being another it I to on, forecast of clear a one a take not able the little to of sure down Well, we because think one but Because risk. that make we're anything. we don't this to get

a to environment, tolerance to But going is we're have sure you this lower typically risk that than so -- risk-free. you might. I'd make acquisition in And say no want

Operator

questions. don't have any We further Instructions] continue. please [Operator Presenters,

Vic Richey

eventful appreciate talk next everybody's I interest today. again. hopefully, you less And Well, before we'll to have days Okay. XX we a

you very much. thank So

Gary Muenster

Thanks.

Operator

call. everyone, And participation. for this Thank concludes you, conference your today's

may You disconnect. now

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