ESE - Earnings call transcript Q4 2020

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Operator

Good day and welcome to ESCO’s Q4 Conference Call. Today’s call is being recorded. With us today are Vic Richey, Chairman and CEO; Gary Muenster, Vice President and CFO.

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

these which Please those to company’s the risk including and circumstances, During the and the may without not and evolving this non-GAAP statements, impact to call, for response current impact to the assume subject which materially and from acquisitions forward-looking statements. which may company’s financial any company measures the inherently duty the may of COVID-XX comparable strength we statements measures. limitation, company to the release pandemic, press risks most to projected refer forward-looking duration results factors of any investments, the for does results a and statements forward-looking make are and any markets future of Actual of uncertainties, serve. GAAP differ company, forward-looking recovery their reconciliation the in update

I Now, the to over turn call Vic. will

Vic Richey

Thanks, Katie.

financial with a update through the how year, details I brief working will today’s we provide are environment. for on COVID beginning Before

to our health the a maintained a the our curve detailed ahead safe sensing We protect And have on working and of monitoring situation provide daily stay change the of basis. of environment almost the goal employees. to was

our financial while products to and have the deliver our the and is healthy. X impact employees and indication to our all decisive on clear action. X months actions I condition to took the were As precise we our and taken past COVID’s customers strong support of business, safe said services protect keep focus, down in over which economic potential call, we first or last we saw The

items have I confident taken in on remaining through position demonstrated to us the today liquidity coupled we hold results unprecedented I approach actions we at us few state. with that coupled have result are begin though with our a am our normal fiscal working that am through operating time. the measures success will these solid operating to months in XX the confident September that allowed Our benefit ‘XX own return the our more strong business as this disciplined as enter next continued to to our we will XXXX. things over

Just while our the for cost to recapping the fiscal still after took outlook, organization our year, action earlier our near-term in sales supporting long-term adjust fit better ‘XX, to thorough across growth. strategy evaluation we structure profitable

these decisions ultimately were at end, because While we to the shrink needed not they in core. done, our be present,

meet the We situation manage to across current market to are have we no is to where very changing teams company experienced cost the ability effectively our demonstrated fortunate And demands. different. have leadership

We for while efforts niche specifically it designed positions we of we direct meet customers’ highly of to are alternative technical will makes to unique This out deliver unique and solutions continue markets, where ESCO benefit our leading and by addressing actively the this our set sources. our difficult continuing in a needs. stronger to products replaced solutions challenges that. even of our various to than from today, come

strong future same create The fundamentals our We continue shareholder new the our to remains our segments. to products of in focus our and across three value. on long-term remains all by continuing goal investment portfolio

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

Gary Muenster

results touch release. press briefly Thanks, on I the out the will laid financial Vic. in

up pop is liquidity where our when having number I cash proud ratio priority year. am financial challenging one hit, we hand position, generated disposal pandemic noted, maintaining Vic am stand times and same the carrying became king with we the flows of extremely modest pleased capacity our cash record today our unexpectedly, because and the I cash while nearly As a available $XXX dry And credit X.XX. between leverage throughout on of powder million at of when

the cash Our adjusted liquidity million, gain impressive described of EPS. In out gross business, frozen items our outlook The technical in partially terminate which we EBITDA share. are discrete $X.XX excluded the we include and earlier of QX of pension discrete decision adjusted packaging our in called valuation fund, and to annuitize are resulted non-strategic three an liability. $XXX release, a which items, results drove our previously calculation and from of in and detail and proceeds generated which after-tax sold the an

cash charge The non-cash and to action eliminates the of rate a relates share. second termination This all successful market risk interest the completion payments, item in resulted It equity which of variable plan. of our a removes reduces ongoing and pension future $X.XX costs volatility.

third cost current their our with The to demand represents reduction actions operating structure USG align COVID-related we requirements. item in segments and implemented cost AMD

a share Adjusted which For share laid a year, consensus share on year, in the in for which now $X.XX $X.XX was touch highlights the exceeded the detail QX few a these I EPS out will briefly a are in estimates. release. and costs a charge. comparative resulted in $X.XX

order sales power a onsite $XX delivery. customer on partial our were of short-term the compared nearly am operating X% as Doble’s substations, large profitable compared million as $X of most $XXX our sales were several We to group, only and as our personnel the historically. to maintenance of despite today’s additional QX reflect of with reflect an realign XXXX. bookings aerospace sales by our international their commentary adjusted were maintain as to our were of including a domestic transformers project timing sales year. XXXX’s million. rebound are despite PTI, of focus various Maintenance by of related USG’s sales spending which which protocols business AMD well customers are XXXX $XXX billion customer due deliver increased ‘XX were and consistent units all-time margin million certain Sales $XX and USG increase the in also the led declines deferrals procurements. navy at very – as deliverables we XXXX. $XXX increased and in other various USG million, of within EBITDA to flat delays our operating profitability quite levels and EBIT solid pleased space EBITDA $XXX to Crissair and similar Doble’s I allowed orders, able $XX to lower in XX.X%. most were compared or sales aerospace sales test down Mayday execution The decreased high to report by renewals that Commercial mandates on chamber to cybersecurity ‘XX QX test million commercial in in a lower $XX to past fiscal and fiscal travel. is sales compared able and result solution where air were of strong some Strong deferrals locations. an environment, new utility sales partially held installation the COVID. $XXX roles million and DUCe uninterrupted restricting noted The Given adjusted million business backdrop number on reflected growth segment to million deliver impact we approximately COVID’s at projects up prior million aerospace seeing project we to was sales commercial offset due XX% to

development. the year. on were of ‘XX took action we the was achieved, earlier, product R&D in year SG&A million as $XXX ‘XX and reduction million, business the we with our which year mentioned As is outlook. up of decisive and our backlog $XXX we fiscal solid of the Entered included when entire despite nearly the of spending downturn million despite a continued fiscal and is growth ended that or evidence This of XX% new $X in in And $XX having million new agility. from our saw start for reduction booked orders

our into business, these ‘XX additional will mathematically will A&D of Class reduce you which be led optics the multiyear the remind large participation on contract products on delivering DoD V drives submarines, Block our fiscal I by will programs, ‘XX. we as forward Our move the strength. book-to-bill Virginia fiscal for we in

$XXX ratio cash continuing of side, $XXX million the operations $XX from as the mentioned. in we On ignoring we modest I pension voluntary made. This generated contribution of X.XX million or liquidity million resulted leverage

along for COVID-XX which operations our circumstances, economic our to fiscal directional normal ‘XX, can at several and we the result will will From a to the forecasting areas not fiscal providing we it time. be of duration positive finite As backdrop to guidance this of continues perspective, methodologies. uncertainty, some near-term uncertainty EPS using momentum. as see a how this predict extent difficult we bring we around affected point where makes be today’s enter And ‘XX

aerospace pockets notable end-markets fiscal of of we recovery. our enter As as utility are stabilization showing well some customer and as ‘XX degree commercial

COVID-XX of commercial signs prospects resuming normal seeing a half in utility spending outlook The patterns. their accelerate customers ‘XX a are with anticipated certainly the travel of We that recovery near-term of year. the viable recovery as fiscal vaccine in to solid half for of the second back and and benefit air will point the begin buying

half first of fiscal half to half of fiscal how to ‘XX of are to down recovery ‘XX The expected is be was and Given favorable ‘XX fiscal pre-COVID, various of of comparatively. ‘XX for first second given in comparison current the that elements expect seeing the we half anticipating. the strong slightly we the second outlook the be

growth during adjusted to adjusted these EPS year, all they compared that consistent to and expect adjusted if in summarize fiscal would show contribute EBITDA this, acquisitions the to it reasonably currently is coming ‘XX with we expectations. sales, fiscal in Obviously, XXXX. expected with and we any of additional adjusted complete EPS So EBITDA to

to will now over Vic. I So it back turn

Vic Richey

the fiscal since and from is fluid. comments my about [indiscernible] offer we release to qualitative and obvious I I situation So as actually are be behind is it are I the end in will continues year markets perspective. some will emphasize commentary ‘XX very think our that that my us,

impact Let operating September, aerospace. in of with completed and are recovery individual the a we playing In commercial our of receiving our A&D expectations for me current with near-term provide our our review thorough and businesses vehicles. update we COVID-XX the signs to ‘XX. segment, various sense Starting across you thinking of of a

next We X the continued months. over expect some to softness X

in their for some and We idle quite carriers seeing strong fleet several million bringing are airline defense are air boarding foreseeable platforms a traffic our passenger of stabilization and recovery remain few some are build are numbers There which the and service of TSA signs The over future of in is passenger flight miles. increasing given emerging daily back our participate. increasing in rates, the business portion in X the backlog per A&D we will day. as

We see in an situation aerospace with market for as opportunity October. current ESCO the ATM as of in we persons also did

maybe where we stress, We through or at will suppliers financial maybe able partnering acquisition assistance look continue competitors price. via an operational experiencing or to at a provide or reasonable who to

is created solid Our test XG communication as including markets, as emerging more of remain Shielding result in the to and technologies. expected served and the given need electromagnetic and technologies, is its electronic business noise for related RF increasing a strength general of

grid market, credible customer vaccine expect back as today’s they to relax both to softness or few and USG’s returning spending expect site maintenance that personnel spend, be delayed am continue cannot normal quickly creating and utility regulatory is quarters social for more their will service compliance. a guidelines to routines. to the the before to on We the next certain visit levels. efficiency indefinitely I normal risk return future significant distancing to USG as can market have the in return without in in Utilities test can come near online the equipment Once spending we money spending safety,

with our remotely. and have support customers hard We to worked communicate

and the their with relationships utility key counterparts differentiator be live are engineers Doble means This to Our success. for positions Doble. creative client and for will their accomplished service

critical am restrictions not does maintain, fundamentals The COVID-XX reliable, industry previously eased. pipeline to new global the the safe related with cybersecurity infrastructure to improve pleased and aging solutions. especially I products by asset need needs are the mentioned power. and of and not hardening utility utility’s as related pandemic. and this USG’s repair have society reduced We of solutions, is change secure really

as their been We investments both more and several in introduced received. end-markets have that our have consumer that products we have recovering to increasing quickly regards are growth new to and energy are expect feedback offerings, recently continue. based and solutions renewable in been these renewable NRG on and With solar wind enthusiastically energy

under to we several on consideration. opportunities Moving M&A, have continue to

We as certain expect past. prudent we in grow a will take to we and approach continue on opportunities have the and taking to action deliberate our business

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

TECC programs. well affiliate, metal widely aircraft commercial in designed on described as supplier our section and parts, to events nicely in subsequent to custom October, operation. located close defense release small Valencia, As the we and refer and are produces the which machined Grinding, defense aerospace acquired its and of we collectively which machining used California as The are missile advanced precision tank technology in and ATM profitable as our Crissair very on

Crissair’s months, and consolidate will further within facility their contribution the Our which ATM plan improve next margin. XX is sometime to

So XXXX ‘XX. as a we enter to we wrap up, solid delivered I think

to leverage long-term any plan opportunities questions M&A, efficiencies additional infrastructure on I fundamentals through to have. will is and success. glad well focus for the operating be you are create Our to look continue and positioned ensure for answer our we to

Operator

[Operator a Stephens. with comes Instructions] [indiscernible] line Tommy question our of first from And

Your now open. line is

Unidentified Analyst

afternoon thanks taking Good my for and question.

Vic Richey

You are welcome.

Unidentified Analyst

things some they outlook with the end-markets said to can of out wanted the to in point ought second sounds half start versus and XXXX. up it for I things year, the what at ahead call sufficient visibility that? or to next give that could businesses in today gave call What the you segments make like drivers optimistic are or commentary directional and go like to half? where you look you as be a least you it as call Let’s back particularly

Gary Muenster

commentary, numbers add I Yes, start can Okay. on and the then – comments. with Vic qualitative will with Tommy, that some the

least will impacted start the ‘XX. test in the So I that was

we going therefore anticipate So into will be the that ‘XX, least impacted.

contributing see. isn’t that a factor to we So the growth really one

So, let’s just set that one aside.

we that. A&D at are lines passenger we shutting two down and Boeing build side, the when the half things were On the back there this daily so uncertainty, one, stabilization the the of things, and Airbus ‘XX, was see boardings, of much freezing rates,

build was rates it passenger So, crapshoot trying a were what and to were tank. the guess in miles

so of supply And guidance. they lot have is chain to visibility, obviously maintain to a more there with some because level some now a for substance, them give

we deep level guidance kind we that booked side, up V, in and consulting the the of the on percentage airline that of that’s X we miles, a have we rates, go portion on the of form and side, we forward trends an the half lot on it’s with that utility year. So, report on helps pretty of completion X good on and literature, more the in all the of have whether build over things seen level across based into the then the gain you see the a weeks the that. or so to half, and or monitor of its orders as consistent defense that And the the thing extrapolated ramp of it. TL first and things last as so anticipation Virginia passenger we And one the kind cost Block second have we in momentum the really opinion Class, just the of like

of of correlation the ‘XX more the compared as scenario. really half easy to half business that back within to the lot So that’s a predict Navy front

So submarine A&D, I’d is business. say the visible the on most

of of stabilization extrapolation the forward reasonably rates. a is TSA Next third And is boardings. build going the of conservative

looked sequentially ‘XX, you fiscal almost to rebound. nice look QX tie a in a at and see we as bought QX if to side QX, from so utility the you it On

us, March. are that sometime declaring February that We new we we will coming on of have based the that in into in those on not victory but products, market on RFPs that based things Vic part, and think mentioned be front

of the part the increase get such and some can’t to of in structure they that. like critical things have of is So something they done their going of forever, the will around the of things most back with out outages they service compliance And or they you side defer themselves benefit pushing compliance factors to be maintenance are are this that the in half field year. the so risk

that across utility spending visibility seeing money, we are the site money. money make mere from side evidence through the So, is new coming the products, fact have and the that utilities by of visits And RFPs. spend their they increasing to

The EPS costs USG you the gone unfortunately some especially than benefit the had because took, other out. if bottom better restructure That costs take will. are to will actions aligned variable line, and we the top cost side the people is important thing fixed those are to footprint, that’s the the faster in that these side with from We an line revenue.

us And gives be conservative. stylistically, And what reasonably to confidence. tend I so that’s think we

are we ourselves the not realm So reasonableness. of outside stretching

for was a relatively that short answer So you.

Unidentified Analyst

that this kind Gary. be helpful, What how offered very been pandemic can’t where disruption? on Maybe your sounds already outlook on anecdotes softness for for about there? can the but continued customer been you offer go all your you business you really base an softness can you And of forever, helpful. touched has quarters. it Doble in just a I some disruptive there kind it has anecdote utility some to about of on share and follow-up take how can the like Thanks, have got coming you commentary And the specific and

Vic Richey

have it who talk are to retired talked one look and truly people of Yes, our recently And across mean, the would to makes utility to able not from RFPs you it’s us based directors I and I and still. country of at I if are out say the together to It’s in They working people utilities work Doble the home fascinating, are I��d that yes. difficult. their industry, on field. put difficult able employees together. because from that say they get not XX% in to

our the utilities and our I to But need are be deliver in And that conservative it even And the that And probably most. of field. you of working to has utilities from more those mean, of say this very home mentioned, in for would some that. interfacing by as the are very, and obviously, the are is have be out reliability there electricity the been would and generate nature little people to all able because say lot again, they the conservative with Gary because so been good, and getting is I work there. that customers happened. conservative as really the I of of important nuclear operations, nature that’s the ones we just

had have we it’s site significantly some have We done before. limited than visits, different what but

prepared comments, I provided my university, of an As this people, And just I started and training doing and a talking to online we thing has lot service you our already mean, if that like about had engineers to customer. prior mentioned in interfacing Doble will, the really with type key. of full been the this

are I not do to be sure they at to that’s personally we town, to what work utility positioned I and us I going few the go a going back know the they have future, before but a ever the are because to going in talked that. help I back normal. mean, they large is get to think well here people into I anecdotally office. here while to really think think So utilities in are I it’s And

not specific for So individuals. whole these that’s obviously the business

significant as just these a whether that had be do that, to long. kind compliance. reliability said have you I testing it impact Having you do Gary has said, mean, or for this for so it in So, pretty of customers.

going it’s a add have one the in to to based move just of the Absolutely. So, would as we it now, direction couple say assumptions back rule-making information get first months to normal. I another? or to could question on

have keep are to on And eye so to going very a that. we close

Unidentified Analyst

you release this some just share I the really are That’s timing afternoon. Thank which to accelerate any there and on you, factors the would a end, my be would you on that the in referenced end-markets might and you the to times regime remarks be or robust, just pretty made Vic. potential that if deals, pipeline to and in currently like several change M&A indications in your then It tax you like outcome interested of close the I could again questions of willing pivot execution year is end-markets all in helpful. think would are with sounds election.

at as potential wait and a sell are flipside, or messiness trailing probably see up do want in things earnings us some help candidate, the frame be you looking could of you where power little well. well? acquisition timing numbers you bit to recent those On there if maybe could But would of anything be to and kind helpful a

Gary Muenster

difficult. mean, have were quickly I the getting we involved mean, people opportunities than to, of very involved I that still mean, more in pay about be we a hitting more we couple it’s appropriate. be out reasonable I quicker and Yes, that I are. in and would button thought multiples I done and things thought differently obviously, been lot honestly. going was of they would it’s people it than a eject really thought played thought

and will perhaps have you the a And doing different primarily their or that’s and they some these, whole probably of as and of of own just this have you one business personalities businesses not even I there happened way know, on mean, be things. deal.

going said unless of done is getting about end think get it’s and than this at behind I getting it rate holidays initially, playing have more I little the be be to the to to year are line on there would. at move we are we do what quickly thought into got might people and people about wanting feel differently there we as that think I concerned XX them. difficult, the more probably this I are anything more get yard But would least. with not done. because just bit just good the opportunities I seeing you point, something, to it’s we I tax get out them before thought the out And closed.

Unidentified Analyst

you Thank it will I back. both. turn

Vic Richey

you. Thank

Operator

Thank Tanwanteng Jon Securities. question Instructions] from comes And with you. [Operator of our the CJS next line

line Your is open. now

Jon Tanwanteng

you question for Thank guys. taking Hey, really and my quarter. nice

actually in record the which quarter is COVID impressive. headwinds, a A&D had I despite really you think

there You have get where of before you that. stable Was about maybe talked or maybe spoken being defense being rates about commercial else that you I there than more people most anything made have stable given more is from and would which next expected, parts great, production now that in helped have pull-ins the quarter the hadn’t maybe gain share quarter? before, are,

Gary Muenster

stuff, just of again number, weren’t Well, it’s the using and because would take is Airbus a COVID and it a lot I’d in example, there kind side, there hurry is that, normal big an of on say Boeing call I any not things. to the rounding extraordinary nothing whole Jon, they

those year on. and of margin globe, later sudden that the get try a $XXX,XXX out three on non-competitive, to in to commercial in funding beauty four particular, particular, projects those through and we therefore, apiece $XXX,XXX, they the coming to up little things in when some the were in spending the you on side, and really they negotiating RFPs So, of is better additional instance, world of challenge that would in are the be in or thought side. pull Navy little we range the so for a a it’s a is I bit are across say, there $XXX,XXX, been is all have opened and going came there

top numbers, from expectations through they have XX% of a or in nice neighborhood very So, pulled the line QX, our XX% exceeded all own going and their the margin. they into on somewhere

with everything I the our mean, Day are but that in cash EBIT helps paying the to deal relative forward they that expectations, group line, literally we the will was take I Navy, own when beat you out there, extraordinary. So, top line A&D and your of when not the that invoice. because only assessment you send X the line with QX

obviously when brought, past three cylinders but year COVID things characterize hit. We So due we the hit some had on we pull-ins. wouldn’t as all that in anything I earlier

work-from-home you products if unless a but or can an Navy in shouldn’t build your or You basement, can’t finance you woman, you be. engineer guy are

And And everybody back most floor. delays staff. disruptions, you the and obviously, production work so the is we if on will, at from had some for absence of part,

was you So, some will, forward instead cumulative the if had backwards, pulling people catch-up pulling from deferred of floor, that lack was you front. that of previously because things but the on of

So, all kind came together. that – kind of of

year past they in would completion across. contribution say I that due of catch-up kind on things the QX also earlier provide So, from things to meaningful the came when in those and come margins

Jon Tanwanteng

amount of might cases talked numbers And down given you come have just COVID about it. or that Got passenger up, looking the then miles, forward, afraid TSA still going but back you are are here just well? globally customers as January to another into the as the that go is the quarter next shoe drop And there U.S. and quarter the on into ramping? also in we

Vic Richey

question to possible answer that’s Yes, honestly. a

going Just mean, that mean, week. are going I to in, slowly. they up percentages I improve couple making that we assumption continue things are we only the of would to a are not bake

assumption our to that’s so And is going happen.

me, mean, cleaner. that airlines with are job, people so, like think trying airplane to if [indiscernible] the if the number but to down, airlines And continue mean, so or doing I it going that travel are – means tell are doing never airlines, – I of there people or obviously it’s great really happen to back and cases not. go come the been the like seems a things could up hard people that’s to out airplanes have I

mask. really are they I think been about strict wearing people

And are more comfortable probably think were the so you once, traveling once first than they I people time. travel

happen. have hard people probably in mean, to it’s in. more together. call this And concern and we to baked it about going are the so was morning holidays, and in December not about is And there holidays say I and getting that what’s Thanksgiving the really some I about

back popping up. there is And the always so that of numbers risk

Jon Tanwanteng

to wind are Okay, sense. thought to the the better you wondering you and to be up NRG I as were year? makes they continue performing see how that where it’s much was enter And solar businesses the business nice going pick to relative

Vic Richey

going Yes, are they obviously, than as two of we enter then over the they thought the year, thought but have quarters, we and they past they down because they better COVID, were were going performed to just to.

obviously with took we but COVID. a So dip,

And was. forecast what so they revised have we outperformed months X the past and everything forecast over their

Jon Tanwanteng

their original it. not forecast? with Got in But line

Vic Richey

they No, year, I we than below mean, anticipated but half. were what the I going into think the still it’s they where somewhat better in are second

Jon Tanwanteng

mentioned it. last got for much – restructuring me, expect you Gary you just going you actually then on mention did run-rate get how to basis does want a the save to And one forward? Okay, do

Gary Muenster

Yes, would anything that. was severance, A&D like didn’t we segment, primarily it have things, the okay, some or so structural in say we close facility I the

so is and variable forward. that we taking volume – going it’s costs. to of And of out aspect the And immediate are because an savings, it, go it’s

the lot And that is going million $X.X benefit was the on then and more structural. USG savings it million. across the forward I’d between So say segment, a somewhere A&D $X side,

building your are product So, model, shutting some down you line. guys it as includes

to million divested happened down not forward. or $X however about that or to business is want it, Because XXXX will either in you of we that it sales go it. $X there realigned define So, million the shut

a uptick, that, businesses why there That’s an making – profitable. you get the because to absence of weren’t that are was those going focused. we very – was so And inherent

that trade compared saying, shows going million is would on of are on like forward ETS. that, to we want this and to know between basis, get but to I the million the see travel, our have to things in to USG on side, you are but installations discretionary to back new have continue costs, and the cost we side and going do like point out they of time, we a to still in half increases the caution be $X because I do things go ‘XX, at across we mitigated, cost the say SG&A $X in – million So and really by stood $X year cost somewhere million $X the travel

say $X and and into that $X it’s $X travel additional take were for deferred savings in million offset $X obviously ‘XX. million I’d discretionary if ‘XX somewhere So of between stood spending, million we then all compensation on or you costs of million that like people by together,

whatever. through get can we So

So it million net-net, put the $X $X I in savings. to million would

Jon Tanwanteng

squeeze this actually is it. conferences every into when on [indiscernible] know and you of but And you big kind based you Doble a do one just year, conference but Got virtual, to expense that to save you a planning it travel, pretty week do your going you it. be you lose does and said I again is of sales year more to the that that all bit, Are expect anything? something

Vic Richey

many definitely a but some conference, be It we it will will arms all have cost virtual as there virtual. around not with And savings, we as will say have that, that I or the working certainly going will be, it. pushed contract. And be year the to that said the far those what associated were don’t something this get bring out was to hotel of and and for people. out that’s if with big having is mean, are And we see the hotel statements that end cost still our

still that. are working we So through

Jon Tanwanteng

Okay, fair you. enough. Thank

Vic Richey

bet. You

Operator

Thank Sidoti Company. you. line John question from of comes the next our Franzreb And & with

Your line open. now is

John Franzreb

taking or kind which bounce September I from the dropdown of something to the step to missing is really seem a to forward didn’t sizable I sounds the call because that stabilize, back and relative maybe through and it me would it like so a seems at in in you afternoon, that question. kind sizable you pull am quarter looking actually comments, half million business finished, go to utility us? to how the be if you $XX of first test threshold, understand around, quarter kind back in come my of A&D. your earlier to September you there like the will September Good posted the in I of suggests gentlemen. to revenue guidance like first the where but telling how profile to relationship you relative That’s you ‘XX me walk Thanks in half ‘XX, of lot are get a down for of of the it such properly

Gary Muenster

fiscal it, part on again, revenue started completion V No, of as let Block those the in you a model. programs, just start those working submarine with ‘XX, were me booked percentage as it’s orders of

for And the a kind really quicker at not going are of whole over midyear one. first there, revenue, over so globe, and the first because you cost that you lot and into are you milestones the are forward appropriate not milestone, crossing you revenue trigger second are getting a crossing instance, the you incurring QX is then momentum when you third QX, and lot get in are just and than are the milestones of the then

same the from half, growing revenue different the these is size a back that more perspective, level, obviously, is it’s half meaningfully the milestones $XX optics just it’s but weighted. grow the about manufacturing back million. And on that recognition with So, the meaningfully $XX just million, across

which not on the SLS, the million are are but the we versus there the large in on kind back pieces we the program submarines space two VACCO, contribution $XX is there, vehicle. first segment, meaningful at biggest talking concentration half the the also [indiscernible] work but we in or called half have we So a way point programs. is the moving makes another, And one transition System, Space of the have there, Launch we a

production phase. a from hardware a transitioning into are phase we development so And

down of and wind is there production you half the a development the so wind as the in a of hardware. timing And gap bit year up little first you then the

at well. first VACCO as to So half there second is delta half a

a expecting of the going it’s big look uptick cadence the we the to to half, understand we then the of back things stuff, more steer, backlog and QX. we to you that’s already then those back in in of it the and similar I the stuff take particular, this And so what course, cost the predictable, milestone have lot are the in half aerospace say is in two because things not threshold,

stable first we picks little the So, in that’s a kind bit. talked the then half about and momentum of up

when transient take these it’s And in or half very the ‘XX. meaningful DUCe, compared fiscal there. security the of side, A things get first is a the lot have, back elements, there a when delta utility similar. the So to we of all versus then things you those the on half you at you cybersecurity in look of big software chunk

of customers. systems but So, you is subscribed software you revenue until that the the the might and really that the get elements system thousands, on drives put recognize ruggedized are of don’t thousands or of or really laptops some them tens sell to in dollars, sold those values actually the not these software that of hardware in you

that $X,XXX, So, like the apiece. later is gets software year in hardware I $X,XXX, piece and $X,XXX the said element

utility than the on margin with skews also contribution plus it is that software hardware. weighting back So the meaningfully half to side is higher

Vic Richey

quarter. a John, drop-off for if I at you about been quarter, the think trying in simplest back to And third, just first, the our go years. significant have just it X we first at the back XX look think way and to fourth second, out it, we’ve go look years to history always and you figure last it’s and

way. So always it’s that been

first back couple it go you we a the are I for year. look what start profile in seeing would years, are here. you very to at think last if the such of strong we make half the So, to be trying off point is, really with think And consistent last the of I and are

first not half. compare think a we the return when it’s we to to will second that this of going to more we that but good normal a in be the half So comparison, year,

John Franzreb

segment, sizable suggesting or the in quarter? like that down sustainable December because also there that business revenue you there. What Is about something a seemed is March your step thoughts were profile the in and/or about it that test case would cause

Vic Richey

back ramp it’s if quarter. you still, think And find fourth first you it’s I mean, good the it’s know a have the and that go in segment I I that to profile. don’t the same they customers the thing. I quarter, are data the to would happened look quarter consistent. you to of at see are probably first Yes, accessible all back go going bit holidays because it. if it’s still accessible you quarter. at just from look and and will The But be a first it encourage very in And

John Franzreb

fair Okay, enough.

was the you. that’s So I for looking Thank guys. color

Vic Richey

Thank you.

Operator

Richey does would now question-and-answer to this like for Vic session. remarks. back to I any turn conclude today’s And closing the call

Vic Richey

our call. in forward to Thank Okay. everybody next you. to Well, thanks and look to talking you

Operator

call. concludes Ladies participating. and gentlemen, this today’s for conference you Thank

disconnect. now may You

ESCO (ESE) 19 Nov 202020 Q4 Earnings call transcript