In This Article:
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Orders: Decline of 15% in the fourth quarter; record backlog of $879 million.
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Sales: Up 9.5% in the quarter, with 8.5% organic growth and 1% from the MPE acquisition.
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Adjusted EBIT Margins: Increased by 130 basis points to 17.4%.
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Adjusted EPS: $1.46 per share, a 17% increase.
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Aerospace and Defense Backlog: Over $600 million, a 24% increase.
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Aerospace and Defense Sales: Up 16% in the quarter.
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Utility Solutions Group Sales: Up 6% in the quarter; renewables sales growth of 9%.
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Test Business Sales: Up 4% in the quarter; margins increased by 80 basis points to 18.3%.
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Full Year Orders: Up 10%; sales up over 7%.
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Full Year Adjusted EBIT: Up 14%; adjusted EPS up 13%.
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Operating Cash Flow: Over $127 million for the full year.
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Capital Spending: Just over $36 million for the year.
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Share Repurchases: $8 million in 2024.
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2025 Sales Growth Guidance: 6% to 8%.
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2025 Adjusted EPS Growth Guidance: 12% to 17%.
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First Quarter 2025 Adjusted EPS Guidance: $0.68 to $0.75.
Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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ESCO Technologies Inc (NYSE:ESE) achieved a significant milestone with orders and sales both surpassing $1 billion for the first time.
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The company ended the year with a record backlog of $879 million, indicating strong future demand.
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Sales in the fourth quarter increased by 9.5%, with 8.5% organic growth and additional growth from the MPE acquisition.
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Adjusted EBIT margins improved by 130 basis points to 17.4%, with margin increases across all three segments.
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The Utility Solutions Group experienced strong sales growth of 6% and margin improvement, driven by increased demand for electricity and renewable energy solutions.
Negative Points
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Fourth quarter orders declined by 15%, primarily due to a tough comparison with high navy orders in the previous year's fourth quarter.
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The aerospace and defense segment faced project profitability issues in the VACCO Space business, impacting financial performance.
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The test business saw an 8.5% decline in orders, although sales and adjusted EBIT improved.
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There is uncertainty regarding the impact of potential policy changes on renewable energy incentives, which could affect future growth.
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The strategic review of the VACCO Space business is ongoing, with potential risks to long-term prospects if administration changes affect NASA or private contractors.
Q & A Highlights
Q: Can you provide more details on the Aerospace and Defense (A&D) outlook, particularly regarding Boeing's impact and commercial aerospace assumptions? A: We have been conservative in our forecasts, assuming a slightly lower build rate than Boeing's published rates due to historical underperformance. While there could be some impact on Boeing-specific contracts, we are confident in offsetting this with other customer work. With the Boeing strike resolved, we expect good growth this year and significant growth in the following years. - Bryan Sayler, President and CEO