ESCO Technologies(US:ESE)2025-11-20 23:02Financial Data and Key Metrics Changes - The company reported a 30% year-over-year increase in adjusted earnings per share from continuing operations, reaching a record $2.32 per share [4][10] - Adjusted EBIT margin expanded by 100 basis points to 23.9% [10] - Sales for the quarter were $353 million, representing a 29% growth, with organic growth at 8% [10][15] Business Line Data and Key Metrics Changes - Aerospace and Defense (A&D) segment saw orders grow by 60% on a reported basis and 12% organically, with sales increasing by 72% to just over $170 million [11] - Utility Solutions Group experienced 17% growth in orders, while sales growth was muted at 2% [13] - The test business reported a 10% revenue growth, ending the year with a backlog up nearly 20% compared to the previous year [14] Market Data and Key Metrics Changes - Organic sales for the Navy market increased by 53% in the quarter and 24% year-over-year [6] - The aerospace market saw revenue up over 10% in the quarter and 14% year-over-year, driven by increased production rates from Boeing [7] Company Strategy and Development Direction - The company aims to focus on the aerospace and Navy end markets, which present durable, long-term growth opportunities [5] - The successful acquisition of Maritime and divestiture of VACO are pivotal steps in the evolution of the company's portfolio [4] Management's Comments on Operating Environment and Future Outlook - Management remains positive about the long-term outlook for both the aircraft and Navy markets, expecting increasing production rates to drive growth [6] - The company anticipates another strong financial year in 2026, with reported sales growth projected in the range of 16%-20% [17] Other Important Information - The company achieved record performance in 2025 across all key metrics, with orders finishing in excess of $1.5 billion, a growth of over 56% [15] - Operating cash flow from continuing operations exceeded $200 million, a significant increase from nearly $122 million in the prior year [16] Q&A Session Summary Question: Context on growth rates and margin trends at the segment level - Management provided guidance for A&D business growth at 6%-8%, with expected margin improvements across all segments [21] Question: Update on the integration of SM&T - The integration is on plan, with the Maritime business performing ahead of expectations and positive new order activity noted [22] Question: Details on $200 million in ESCO maritime orders - The orders are associated with U.K. submarine-related programs, expected to generate revenue over two years [27][29] Question: Impact of canceled flights on aerospace - Management indicated no significant impact from shutdowns, with strong growth expected in aircraft manufacturing [30] Question: Thoughts on capital allocation moving forward - The company is actively looking at M&A opportunities, focusing on businesses that fit into aerospace, navy, or utility end markets [42][43]