ESCO TECHNOLOGIES INC — Call Transcript 2026

Day, and thank you for standing by. Welcome to Q1 2026 ESCO Technologies Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. On the call today, we have Bryan Sayler, President and CEO; Chris Tucker, Senior Vice President and CFO. And now, I'd like to turn the conference over to the first speaker today, Kate Lowrey, Vice President of Investor Relations. Kate, now you have the floor. Thank you. Statements made during this call, which are not strictly historical, are forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws. These statements are based on current expectations and assumptions, and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, the risk factors referenced in the company's press release issued today, which will be filed as an exhibit to the company's Form 8-K we filed. We undertake no duty to update or revise any forward-looking statements except as may be required by applicable laws or regulations. In addition, during this call, the company may discuss some non-GAAP financial measures in describing the company's operating results. Reconciliation of these measures to the most comparable GAAP measures can be found in the press release issued today and found on the company's website at www.escotechnologies.com under the link Investor Relations. Now I'll turn the call over to Bryan. Thanks, Kate, and thanks everyone for joining today's call. We are pleased to meet with you this afternoon to discuss ESCO's strong Q1 results, which have our fiscal 2026 off to a great start. We booked over $550 million in orders in Q1, which is an increase of 143% over the prior year. All three of our segments saw double-digit orders growth, led by strong aerospace demand and large Navy orders at Maritime and Globe. We believe in the long-term growth drivers across our end markets, and it was great to see the positive momentum across our businesses to start the year. Top line sales growth of 35%, combined with 380 points of adjusted EBIT margin expansion, drove a 73% year-over-year increase in adjusted earnings per share from continuing operations to a Q1 record of $1.64 per share. Our exceptional financial results for the quarter are a testament to our strategic positioning across our served markets, combined with disciplined execution by our global team. Chris will take us through all of the financial details in the quarter, but before we get to that, I want to give you a few comments on each of the segments. Let's start with aerospace and defense. As I mentioned, we're seeing tremendous order strength on both US and UK Navy programs from the Maritime business and from our organic Navy business. In addition, sales were up 76% in the quarter, driven by the addition of Maritime and double-digit organic growth across our Navy and aerospace programs. The growth story here remains intact, driven by increasing build rates for commercial aerospace OEMs and sizable investments from our defense customers as they refresh and expand their capabilities. Overall, we're seeing the benefits of our A&D segment's sharper focus on the aerospace and Navy markets, where the long-term outlook remains quite positive. Switching over to our utility solutions group. The results here were a little bit more mixed in the quarter. Orders were up double digits, with very strong order flow for services, condition monitoring, and offline test equipment at Doble. But this was partially offset by lower demand in our renewables business. Sales were up modestly over the prior year, as renewables headwinds largely offset the 6% revenue growth at Doble. Overall, we remain quite excited about the outlook for our utilities business. The majority of the activity here is driven by utility capital spending focused on grid reliability and capacity increases, and we continue to see those forecasts grow. ESCO's capabilities have a clear role to play in assisting utilities to meet growing electricity demand, and we remain bullish on the long-term prospects for growth here. As we have discussed previously, the renewables market is recalibrating right now as US developers focus on completing current projects in order to satisfy the safe harbor provisions related to tax credits, which expire in July. This has slowed domestic renewables investments in the near term, but we continue to believe that longer term, renewables will play a vital role as a cost-competitive source of generation as utilities work to meet the increasing demand for electric power. Finally, I'll touch on the Test business, which had a robust start to the year, with orders up 17% over the prior year and revenue up 27%. This business had a nice year of recovery in 2025, and it's great to see that momentum continue with significant growth during Q1. This is a technology-driven business with broad capabilities to serve customers across the RF test and measurement and industrial shielding markets. The team here is executing very well, and we're excited the outlook for Test continues to improve. Overall, our Q1 results got us off to a great start for the year. With record backlog and continuing strength across our businesses, we are raising our full-year sales and earnings guidance. With that, I'll turn it over to Chris, who will run you through the financial details for the quarter. Thanks, Bryan. Everyone can follow along on the chart presentation. We will start on page three, which shows the financial highlights for Q1. The bar charts across the top of this page clearly show that ESCO had a tremendous Q1. The key theme with ESCO's financial performance right now is that core company performance on an organic basis is quite strong, and the ESCO Maritime acquisition is adding significantly to that base company performance. It's a powerful combination. Getting to the numbers, we start with orders, which increased 143%. Organic order growth was double-digit for all three business platforms, with aerospace and defense being particularly strong. Maritime added $238 million of orders as the business received large contract awards in the UK. On the sales side, reported growth was 35%, which was comprised of 11% organic growth and $51 million of sales from Maritime. On the profitability side, we saw adjusted EBIT margins improve by 380 basis points to 19.4%, and adjusted earnings per share increased by nearly 73% to $1.64 per share. Next, we'll go through the segment highlights, starting with Aerospace and Defense on page four. A great quarter here, starting with orders, which came in at over $380 million, compared to $75 million in the prior year quarter. Order activity was quite strong from the commercial and military aircraft customers. Additionally, Navy order activity was also very strong, with organic growth driven by Virginia-class Block VI orders. Sales in the quarter were $144 million, with organic growth of 14%. This robust organic growth was driven by strength from commercial and defense aerospace, as well as the Navy business. It's a really nice performance from all parts of the core aerospace and defense platform. On the profitability side, we had tremendous increases with adjusted EBIT margins up to 26.5%, which is more than 500 basis points of improvement. Adjusted EBIT and adjusted EBIT dollars both more than doubled from last year's Q1. Again, this demonstrates the strength of our base company performance and the additive impact of the ESCO Maritime acquisition. Margin increases were due to positive impacts from leveraging sales growth and increased prices, while Q1 also had favorable mix due to aftermarket sales. Next, we will go to chart five in the Utility Solutions Group. Orders here were up 10% in Q1, driven by strong performance at Doble, where orders grew by 15%. Backlog finished at nearly $155 million, up 8% since September 30th. Sales in the quarter were up a modest 1%. Doble sales growth of 6% was mostly offset by declines at NRG. Doble continues to see good end market activity across a number of product lines serving their regulated utility customer base, while NRG continues to see near-term market weakness as the renewable activity resets. Adjusted EBIT dollars were down just over 4%, with price increases and sales volume leverage at Doble unable to offset margin drops at NRG. Next, we have the Test business on page six. This business had a terrific start to fiscal 2026, with orders up over 17% and sales up nearly 27%. This business is seeing robust market activity centered around US test and measurement, industrial shielding, medical shielding, and power filters. Adjusted EBIT margins improved nicely, increasing to 13.8%, which represents an increase of 320 basis points from last year's Q1. The business is leveraging the sales growth nicely and also increasing margins via price increases and cost containment. Going to chart seven, we have cash flow highlights for Q1. Operating cash flow in Q1 was very strong, more than doubling to $68.9 million on a continuing operations basis. This was led by an increase in contract liability to the Navy businesses. Capital spending increased slightly in the quarter, and there was also a payment of just over $5 million during the quarter for the final working capital settlement related to the ESCO Maritime acquisition last year. Our last chart is number eight, where we have the updated 2026 guidance. With the great start to the year, we're able to substantially increase the 2026 outlook. The sales guidance is increasing by $20 million at the midpoint to a range of $1.29 billion to $1.33 billion. The increase is coming primarily from the Test business, where we had Q1 outperformance in sales and orders, driving up the full-year forecast. The original sales guidance for Test was for growth in the range of 3% to 5%, and the updated guide is for revenue growth in the range of 9% to 11%. Additionally, we had a slight increase in the A&D sales outlook. Overall, the sales increase is driving increased adjusted EBIT performance expectations for 2026. Additionally, Q1 tax rate was favorable, and that impact will flow to the full year forecast. This means that full year tax rate projections are now in a range of 23% to 23.5%, compared to 23.7% to 24.1% in the original guidance. All of this drives the full year adjusted earnings per share to a range of $7.90 to $8.15 per share. Compared to the prior guidance range, this is an increase of $0.38 per share at the midpoint and represents growth of 31% to 35% compared to 2025 adjusted earnings per share. The original outlook represented a strong growth plan for ESCO, and we are pleased to share this increased forecast, representing an even stronger growth trajectory. That completes the financial summary, and now I'll turn it back over to Bryan. Thanks, Chris. As you've heard from our commentary, Q1 was a great start to the year. Robust orders and strong execution have put us in a position to raise our outlook for the full year. With that, we're finished with our prepared remarks and can turn it over to the Q&A. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. The first question today will come from the line of Tommy Moll of Stephens. Your line is open. Good afternoon, and thanks for taking my questions. Hey, Tommy. Bryan, my first question is on the A&D orders. To the extent you can comment on ship set content on either side of the Atlantic, if there's any updates there, we'd appreciate it. And maybe bigger picture on orders. You know, last quarter's 0.83 book-to-bill was clearly not the right level. This quarter's 2.66 is probably not a sustainable level. But how would you... Just give us, give us something about some kind of enduring takeaway here on the state of affairs there. Well, I'll take the last piece first, and that is, I think the enduring takeaway is that, the long-term demand in all of these markets, is really, really good. I think we've signaled a number of times that, Navy, in particular, is gonna be very lumpy. I think we mentioned in November's conference call that we had a large, you know, $200 million order in the UK that came through. Unfortunately, the way that, the MOD, thinks about those things, we're not really in a position to be able to give you specifics on platforms or, or our content there. So, I would not be able to give you a lot of detail there. I'd say over on the US side, we also received in the quarter about $30 million in orders for Virginia-class Block VI. We would expect that to kind of be continuing, but again, that's gonna come in big chunks, and so that's gonna be kind of lumpy, and it's not always gonna be in the same quarter every year. So the year-over-year, quarter-to-quarter comparisons aren't really great. I think the other big story here is that we really did see pretty robust return to orders from our aerospace OEMs. You know, 2025 was kind of a year that was a little soft on the order side, as, you know, build rates were kind of stable, and there seemed to be a lot of management of inventory going on in the supply chain. But we think that they're kind of through that. We're really encouraged to see Boeing and the other OEMs kind of getting their build rates up, and we're starting to see that come through on our order book. I'd also say there was a pretty good, pretty good amount of military aircraft activity in the quarter as well. You know, that's something that is more stable, probably will be lumpy, through a, you know, four-quarter cycle, but generally speaking, will be pretty repetitive on a year-to-year basis with, a little bit of growth. Bryan, if I could stay on A&D for another question. Sure. Just looking at the results in Q1 and the guide for the year, I'm talking revenue now. Yeah. It looks conservative at first glance. I mean, you raised it from a seven to an eight at the midpoint, but you started the year in the teens on a pretty tough comp. So maybe walk me back from that assumption if there's something I'm missing here. Yeah, Tommy, this is Chris. You know, I would say that, you know, we do expect that Q1 is gonna be the strongest growth, and we would expect to still see solid growth through the year, but maybe kind of tapering down a little bit. And then when we get to Q4, we have, you know, kind of lower growth overall. Again, I think that's a function of the comps a little bit. So you know, we still see a nice high single-digit outlook there in the core business, but you know, understanding it's a little bit front-end loaded. Thank you both. I'll turn it back. Thank you. One moment for the next question. The next question will be coming from the line of Jon Tanwanteng of CJS Securities. Your line is open. Hi, thank you for taking my questions and a really great quarter and outlook, guys. If you could start. if you could start, what's driving the strength in Test, and how did that change so quickly, in the span of 90 days? Listen, a lot of our traditional core markets, you know, particularly like electromagnetic compatibility, you know, medical shielding, those really came back, very, very strong, this year, or this quarter, I would say. We won a couple of pretty good-sized orders, and that's really, you know, because it happened earlier in the year, we're gonna see a lot of that come through, as revenue, within the year. I would also say that we're starting—you know, we've seen kind of a return to, you know, regular orders from our EMP filter product line that supports, you know, some of the government data centers and that sort of thing. So, just a pretty broad base. I would tell you the one area that we're still not, you know, feeling a love on is the wireless business. I mean, it we did see a little bit of growth there, but it's coming off a very low base. So that's the one area where we're probably still looking for some recovery. But I would say overall, quite good. A little bit of A&D in there, some microwave stuff, so really good, good. And I would say Europe and the US were the two big leaders there. Got it. Thank you. And then, are you within sight of the trough of the energy business, or do you think that's gonna extend a little further out? Yeah, listen, I think that what we believe about that is that the focus for all of the developers in the US is really they're hyper-focused on kind of getting as much done on their existing projects by the end of July, so that they can qualify as much of that as possible for those tax credits. And so, you know, a lot of our content's already been delivered on some of those projects, and so that's, you know, that's leading them to make lower investments right now on new projects. But we expect that that's gonna kind of revert in the second half of 2026. So it might be in our Q4, it might be in Q1 of next year. That's when we think that things are gonna kind of return to what we would call normal growth, which would be kind of high single digits, kind of like our regulated utility business operates. So please remember, John, that, you know, after the Inflation Reduction Act was put in place, you know, that whole market kind of got turbocharged for two or three years, and now they're kind of, you know, you know, getting off that sugar high from all those tax incentives, and it's gonna take them, you know, a couple more months to kind of get back into the pocket and really making good decisions. The renewables business, you know, will have a big role to play because it is very cost effective, relatively easy to deploy, and the assets are available, and those are all characteristics that utilities are looking for. Got it. Thank you. And then last one, if I could. Just the large orders of the Maritime business, can you just talk about how those layer in over the next couple of years, and if that's an acceleration of the growth rate, or if that's in line with what your expectations were? Yeah, I would say it, it's in line, you know, kind of since we've owned the company. You know, we closed the deal at the end of April, and so these were kind of the expectations were that this order would come in. As far as how that layers in, I would say we would get a little revenue starting in Q4, and then you'll start to see it kind of kick in more in 2027 and 2028. So these are, you know, these are long-term contracts and programs, that really kind of help solidify the outlook for 2027 and beyond, I would say. So that's kind of how we're thinking about them, and really not much of a revenue impact this year, although there will be a little bit towards the end of the year. Got it. Thank you. Thank you. One moment. We do have a follow-up question, and that question is coming from the line of Tommy Moll. Stephens, your line is open. Thanks for a follow-up question here. I had to ask on capital allocation, you'll look, not too long from now on, potentially have a net cash balance sheet. So I'm just curious what comments you can make on, M&A funnel or capital allocation more broadly. Thank you. Yeah, yeah. Well, listen, I think, with the sale of the, the VACCO business and the completion of the Maritime business, and that integration is kind of going pretty well, our cash flow really has been outstanding, and, you know, our leverage is pretty low. We are actively rebuilding a pipeline of M&A opportunities. The market looks pretty healthy, and we do see a number of different prospects on the horizon. Nothing we can announce, you know, at this point in time, but, you know, we do have a couple of good things that we could get something done this year. So that's really our primary focus for a deployment of capital, would be to continue to add good, fit, strategic acquisitions. I think that we're gonna continue to be, a little bit picky, focused primarily on our utility segment, our aircraft components segment, and our, Navy segment, where, you know, we think we understand those markets pretty well, and they are, they're all markets that have really good long-term secular growth, characteristics. So that's kind of where our focus is right now. Thank you, Bryan. That's all from me. Thank you. We have a follow-up question from the line of Jon Tanwanteng of CJS. Your line is open. Thanks for the follow-up. I was wondering if you could talk a little bit more about the military business in the A&D segment that is not Navy. You mentioned strength in military aircraft. Just wondering where that's coming from, number one, and if there's anything outside of that, maybe drones or munitions, that's driving some strength there. Yeah, I'd say it's pretty broad-based. But a couple of highlights there. You know, you would've seen in the 2025 reconciliation bill that they put a lot of money out there. They're buying 21 of the F-15EX fighters. That's a platform that we have a lot of content on. You know, there's a lot going on with regard to the sixth generation fighter platform, the F-47. And you know, that's been a positive story for us. So yeah, there's a lot of good things going on, but I would say yeah, the traditional kind of F-35 missile programs, all those things are all kind of coming through for us. Got it. Thank you. And then just for the broader airplane business, the commercial side, how closely does your guidance, I guess, mirror the targeted production rates at the OEMs, or are you still giving them a little cushion in your outlook? No, we still have cushion. I think that, you know, you know, we follow, you know, our OEM partners very, very closely. But I think that we have our own opinion, which is probably modestly skeptical of their ability to get to reach their targets. And so when we are communicating, you know, to you, you know, I think you should assume there's a little bit of discount on there, which, you know, listen, if they're successful, then that's gonna be all upside for us still. Got it. Thank you, guys. Thanks, John. Thank you. Thank you, and this concludes today's Q&A session. I would like to turn the call back over to Bryan for closing remarks. Please go ahead. Well, listen, thanks for taking a little bit of time to hear about our Q1. We're pretty excited about the results and probably more excited about our growth prospects going forward. So we'll look forward to talking to you again next quarter. Thank you for joining today's program. You may all disconnect.

Speaker 5: Day, and thank you for standing by. Welcome to Q1 2026 ESCO Technologies Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. On the call today, we have Bryan Sayler, President and CEO; Chris Tucker, Senior Vice President and CFO. And now, I'd like to turn the conference over to the first speaker today, Kate Lowrey, Vice President of Investor Relations. Kate, now you have the floor. Day, and thank you for standing by. day and thank you for standing by Welcome to Q1 2026 ESCO Technologies Earnings Call. welcome to q1 2026 esco technologies earnings call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode After the speaker's presentation, there'll be a question-and-answer session. after the speaker's presentation there'll be a question-and-answer session To ask a question during this session, you'll need to press star one one on your telephone. to ask a question during this session you'll need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded On the call today, we have Bryan Sayler, President and CEO; Chris Tucker, Senior Vice President and CFO. on the call today we have bryan sayler president and ceo chris tucker senior vice president and cfo And now, I'd like to turn the conference over to the first speaker today, Kate Lowrey, Vice President of Investor Relations. and now i'd like to turn the conference over to the first speaker today kate lowrey vice president of investor relations Kate, now you have the floor. kate now you have the floor

Speaker 4: Thank you. Statements made during this call, which are not strictly historical, are forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws. These statements are based on current expectations and assumptions, and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, the risk factors referenced in the company's press release issued today, which will be filed as an exhibit to the company's Form 8-K we filed. We undertake no duty to update or revise any forward-looking statements except as may be required by applicable laws or regulations. In addition, during this call, the company may discuss some non-GAAP financial measures in describing the company's operating results. Thank you. thank you Statements made during this call, which are not strictly historical, are forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws. statements made during this call which are not strictly historical are forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws These statements are based on current expectations and assumptions, and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, the risk factors referenced in the company's press release issued today, which will be filed as an exhibit to the company's Form 8-K we filed. these statements are based on current expectations and assumptions and actual results may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment including but not limited to the risk factors referenced in the company's press release issued today which will be filed as an exhibit to the company's form 8-k we filed We undertake no duty to update or revise any forward-looking statements except as may be required by applicable laws or regulations. we undertake no duty to update or revise any forward-looking statements except as may be required by applicable laws or regulations In addition, during this call, the company may discuss some non-GAAP financial measures in describing the company's operating results. in addition during this call the company may discuss some non-gaap financial measures in describing the company's operating results Reconciliation of these measures to the most comparable GAAP measures can be found in the press release issued today and found on the company's website at www.escotechnologies.com under the link Investor Relations. Now I'll turn the call over to Bryan. Reconciliation of these measures to the most comparable GAAP measures can be found in the press release issued today and found on the company's website at www.escotechnologies.com under the link Investor Relations. reconciliation of these measures to the most comparable gaap measures can be found in the press release issued today and found on the company's website at www.escotechnologies.com under the link investor relations Now I'll turn the call over to Bryan. now i'll turn the call over to bryan

Speaker 1: Thanks, Kate, and thanks everyone for joining today's call. We are pleased to meet with you this afternoon to discuss ESCO's strong Q1 results, which have our fiscal 2026 off to a great start. We booked over $550 million in orders in Q1, which is an increase of 143% over the prior year. All three of our segments saw double-digit orders growth, led by strong aerospace demand and large Navy orders at Maritime and Globe. We believe in the long-term growth drivers across our end markets, and it was great to see the positive momentum across our businesses to start the year. Thanks, Kate, and thanks everyone for joining today's call. thanks kate and thanks everyone for joining today's call We are pleased to meet with you this afternoon to discuss ESCO's strong Q1 results, which have our fiscal 2026 off to a great start. we are pleased to meet with you this afternoon to discuss esco's strong q1 results which have our fiscal 2026 off to a great start We booked over $550 million in orders in Q1, which is an increase of 143% over the prior year. we booked over $550 million in orders in q1 which is an increase of 143% over the prior year All three of our segments saw double-digit orders growth, led by strong aerospace demand and large Navy orders at Maritime and Globe. all three of our segments saw double-digit orders growth led by strong aerospace demand and large navy orders at maritime and globe We believe in the long-term growth drivers across our end markets, and it was great to see the positive momentum across our businesses to start the year. we believe in the long-term growth drivers across our end markets and it was great to see the positive momentum across our businesses to start the year Top line sales growth of 35%, combined with 380 points of adjusted EBIT margin expansion, drove a 73% year-over-year increase in adjusted earnings per share from continuing operations to a Q1 record of $1.64 per share. Our exceptional financial results for the quarter are a testament to our strategic positioning across our served markets, combined with disciplined execution by our global team. Chris will take us through all of the financial details in the quarter, but before we get to that, I want to give you a few comments on each of the segments. Let's start with aerospace and defense. As I mentioned, we're seeing tremendous order strength on both US and UK Navy programs from the Maritime business and from our organic Navy business. Top line sales growth of 35%, combined with 380 points of adjusted EBIT margin expansion, drove a 73% year-over-year increase in adjusted earnings per share from continuing operations to a Q1 record of $1.64 per share. top line sales growth of 35% combined with 380 points of adjusted ebit margin expansion drove a 73% year-over-year increase in adjusted earnings per share from continuing operations to a q1 record of $1.64 per share Our exceptional financial results for the quarter are a testament to our strategic positioning across our served markets, combined with disciplined execution by our global team. our exceptional financial results for the quarter are a testament to our strategic positioning across our served markets combined with disciplined execution by our global team Chris will take us through all of the financial details in the quarter, but before we get to that, I want to give you a few comments on each of the segments. chris will take us through all of the financial details in the quarter but before we get to that i want to give you a few comments on each of the segments Let's start with aerospace and defense. let's start with aerospace and defense As I mentioned, we're seeing tremendous order strength on both US and UK Navy programs from the Maritime business and from our organic Navy business. as i mentioned we're seeing tremendous order strength on both us and uk navy programs from the maritime business and from our organic navy business In addition, sales were up 76% in the quarter, driven by the addition of Maritime and double-digit organic growth across our Navy and aerospace programs. The growth story here remains intact, driven by increasing build rates for commercial aerospace OEMs and sizable investments from our defense customers as they refresh and expand their capabilities. Overall, we're seeing the benefits of our A&D segment's sharper focus on the aerospace and Navy markets, where the long-term outlook remains quite positive. Switching over to our utility solutions group. The results here were a little bit more mixed in the quarter. Orders were up double digits, with very strong order flow for services, condition monitoring, and offline test equipment at Doble. But this was partially offset by lower demand in our renewables business. In addition, sales were up 76% in the quarter, driven by the addition of Maritime and double-digit organic growth across our Navy and aerospace programs. in addition sales were up 76% in the quarter driven by the addition of maritime and double-digit organic growth across our navy and aerospace programs The growth story here remains intact, driven by increasing build rates for commercial aerospace OEMs and sizable investments from our defense customers as they refresh and expand their capabilities. the growth story here remains intact driven by increasing build rates for commercial aerospace oems and sizable investments from our defense customers as they refresh and expand their capabilities Overall, we're seeing the benefits of our A&D segment's sharper focus on the aerospace and Navy markets, where the long-term outlook remains quite positive. overall we're seeing the benefits of our a&d segment's sharper focus on the aerospace and navy markets where the long-term outlook remains quite positive Switching over to our utility solutions group. switching over to our utility solutions group The results here were a little bit more mixed in the quarter. the results here were a little bit more mixed in the quarter Orders were up double digits, with very strong order flow for services, condition monitoring, and offline test equipment at Doble. orders were up double digits with very strong order flow for services condition monitoring and offline test equipment at doble But this was partially offset by lower demand in our renewables business. but this was partially offset by lower demand in our renewables business Sales were up modestly over the prior year, as renewables headwinds largely offset the 6% revenue growth at Doble. Overall, we remain quite excited about the outlook for our utilities business. The majority of the activity here is driven by utility capital spending focused on grid reliability and capacity increases, and we continue to see those forecasts grow. ESCO's capabilities have a clear role to play in assisting utilities to meet growing electricity demand, and we remain bullish on the long-term prospects for growth here. As we have discussed previously, the renewables market is recalibrating right now as US developers focus on completing current projects in order to satisfy the safe harbor provisions related to tax credits, which expire in July. Sales were up modestly over the prior year, as renewables headwinds largely offset the 6% revenue growth at Doble. sales were up modestly over the prior year as renewables headwinds largely offset the 6% revenue growth at doble Overall, we remain quite excited about the outlook for our utilities business. overall we remain quite excited about the outlook for our utilities business The majority of the activity here is driven by utility capital spending focused on grid reliability and capacity increases, and we continue to see those forecasts grow. the majority of the activity here is driven by utility capital spending focused on grid reliability and capacity increases and we continue to see those forecasts grow ESCO's capabilities have a clear role to play in assisting utilities to meet growing electricity demand, and we remain bullish on the long-term prospects for growth here. esco's capabilities have a clear role to play in assisting utilities to meet growing electricity demand and we remain bullish on the long-term prospects for growth here As we have discussed previously, the renewables market is recalibrating right now as US developers focus on completing current projects in order to satisfy the safe harbor provisions related to tax credits, which expire in July. as we have discussed previously the renewables market is recalibrating right now as us developers focus on completing current projects in order to satisfy the safe harbor provisions related to tax credits which expire in july This has slowed domestic renewables investments in the near term, but we continue to believe that longer term, renewables will play a vital role as a cost-competitive source of generation as utilities work to meet the increasing demand for electric power. Finally, I'll touch on the Test business, which had a robust start to the year, with orders up 17% over the prior year and revenue up 27%. This business had a nice year of recovery in 2025, and it's great to see that momentum continue with significant growth during Q1. This is a technology-driven business with broad capabilities to serve customers across the RF test and measurement and industrial shielding markets. The team here is executing very well, and we're excited the outlook for Test continues to improve. This has slowed domestic renewables investments in the near term, but we continue to believe that longer term, renewables will play a vital role as a cost-competitive source of generation as utilities work to meet the increasing demand for electric power. this has slowed domestic renewables investments in the near term but we continue to believe that longer term renewables will play a vital role as a cost-competitive source of generation as utilities work to meet the increasing demand for electric power Finally, I'll touch on the Test business, which had a robust start to the year, with orders up 17% over the prior year and revenue up 27%. finally i'll touch on the test business which had a robust start to the year with orders up 17% over the prior year and revenue up 27% This business had a nice year of recovery in 2025, and it's great to see that momentum continue with significant growth during Q1. this business had a nice year of recovery in 2025 and it's great to see that momentum continue with significant growth during q1 This is a technology-driven business with broad capabilities to serve customers across the RF test and measurement and industrial shielding markets. this is a technology-driven business with broad capabilities to serve customers across the rf test and measurement and industrial shielding markets The team here is executing very well, and we're excited the outlook for Test continues to improve. the team here is executing very well and we're excited the outlook for test continues to improve Overall, our Q1 results got us off to a great start for the year. With record backlog and continuing strength across our businesses, we are raising our full-year sales and earnings guidance. With that, I'll turn it over to Chris, who will run you through the financial details for the quarter. Overall, our Q1 results got us off to a great start for the year. overall our q1 results got us off to a great start for the year With record backlog and continuing strength across our businesses, we are raising our full-year sales and earnings guidance. with record backlog and continuing strength across our businesses we are raising our full-year sales and earnings guidance With that, I'll turn it over to Chris, who will run you through the financial details for the quarter. with that i'll turn it over to chris who will run you through the financial details for the quarter

Speaker 2: Thanks, Bryan. Everyone can follow along on the chart presentation. We will start on page three, which shows the financial highlights for Q1. The bar charts across the top of this page clearly show that ESCO had a tremendous Q1. The key theme with ESCO's financial performance right now is that core company performance on an organic basis is quite strong, and the ESCO Maritime acquisition is adding significantly to that base company performance. It's a powerful combination. Getting to the numbers, we start with orders, which increased 143%. Organic order growth was double-digit for all three business platforms, with aerospace and defense being particularly strong. Maritime added $238 million of orders as the business received large contract awards in the UK. Thanks, Bryan. thanks bryan Everyone can follow along on the chart presentation. everyone can follow along on the chart presentation We will start on page three, which shows the financial highlights for Q1. we will start on page three which shows the financial highlights for q1 The bar charts across the top of this page clearly show that ESCO had a tremendous Q1. the bar charts across the top of this page clearly show that esco had a tremendous q1 The key theme with ESCO's financial performance right now is that core company performance on an organic basis is quite strong, and the ESCO Maritime acquisition is adding significantly to that base company performance. the key theme with esco's financial performance right now is that core company performance on an organic basis is quite strong and the esco maritime acquisition is adding significantly to that base company performance It's a powerful combination. it's a powerful combination Getting to the numbers, we start with orders, which increased 143%. getting to the numbers we start with orders which increased 143% Organic order growth was double-digit for all three business platforms, with aerospace and defense being particularly strong. organic order growth was double-digit for all three business platforms with aerospace and defense being particularly strong Maritime added $238 million of orders as the business received large contract awards in the UK. maritime added $238 million of orders as the business received large contract awards in the uk On the sales side, reported growth was 35%, which was comprised of 11% organic growth and $51 million of sales from Maritime. On the profitability side, we saw adjusted EBIT margins improve by 380 basis points to 19.4%, and adjusted earnings per share increased by nearly 73% to $1.64 per share. Next, we'll go through the segment highlights, starting with Aerospace and Defense on page four. A great quarter here, starting with orders, which came in at over $380 million, compared to $75 million in the prior year quarter. Order activity was quite strong from the commercial and military aircraft customers. Additionally, Navy order activity was also very strong, with organic growth driven by Virginia-class Block VI orders. Sales in the quarter were $144 million, with organic growth of 14%. On the sales side, reported growth was 35%, which was comprised of 11% organic growth and $51 million of sales from Maritime. on the sales side reported growth was 35% which was comprised of 11% organic growth and $51 million of sales from maritime On the profitability side, we saw adjusted EBIT margins improve by 380 basis points to 19.4%, and adjusted earnings per share increased by nearly 73% to $1.64 per share. on the profitability side we saw adjusted ebit margins improve by 380 basis points to 19.4% and adjusted earnings per share increased by nearly 73% to $1.64 per share Next, we'll go through the segment highlights, starting with Aerospace and Defense on page four. next we'll go through the segment highlights starting with aerospace and defense on page four A great quarter here, starting with orders, which came in at over $380 million, compared to $75 million in the prior year quarter. a great quarter here starting with orders which came in at over $380 million compared to $75 million in the prior year quarter Order activity was quite strong from the commercial and military aircraft customers. order activity was quite strong from the commercial and military aircraft customers Additionally, Navy order activity was also very strong, with organic growth driven by Virginia-class Block VI orders. additionally navy order activity was also very strong with organic growth driven by virginia-class block vi orders Sales in the quarter were $144 million, with organic growth of 14%. sales in the quarter were $144 million with organic growth of 14% This robust organic growth was driven by strength from commercial and defense aerospace, as well as the Navy business. It's a really nice performance from all parts of the core aerospace and defense platform. On the profitability side, we had tremendous increases with adjusted EBIT margins up to 26.5%, which is more than 500 basis points of improvement. Adjusted EBIT and adjusted EBIT dollars both more than doubled from last year's Q1. Again, this demonstrates the strength of our base company performance and the additive impact of the ESCO Maritime acquisition. Margin increases were due to positive impacts from leveraging sales growth and increased prices, while Q1 also had favorable mix due to aftermarket sales. Next, we will go to chart five in the Utility Solutions Group. This robust organic growth was driven by strength from commercial and defense aerospace, as well as the Navy business. this robust organic growth was driven by strength from commercial and defense aerospace as well as the navy business It's a really nice performance from all parts of the core aerospace and defense platform. it's a really nice performance from all parts of the core aerospace and defense platform On the profitability side, we had tremendous increases with adjusted EBIT margins up to 26.5%, which is more than 500 basis points of improvement. on the profitability side we had tremendous increases with adjusted ebit margins up to 26.5% which is more than 500 basis points of improvement Adjusted EBIT and adjusted EBIT dollars both more than doubled from last year's Q1. adjusted ebit and adjusted ebit dollars both more than doubled from last year's q1 Again, this demonstrates the strength of our base company performance and the additive impact of the ESCO Maritime acquisition. again this demonstrates the strength of our base company performance and the additive impact of the esco maritime acquisition Margin increases were due to positive impacts from leveraging sales growth and increased prices, while Q1 also had favorable mix due to aftermarket sales. margin increases were due to positive impacts from leveraging sales growth and increased prices while q1 also had favorable mix due to aftermarket sales Next, we will go to chart five in the Utility Solutions Group. next we will go to chart five in the utility solutions group Orders here were up 10% in Q1, driven by strong performance at Doble, where orders grew by 15%. Backlog finished at nearly $155 million, up 8% since September 30th. Sales in the quarter were up a modest 1%. Doble sales growth of 6% was mostly offset by declines at NRG. Doble continues to see good end market activity across a number of product lines serving their regulated utility customer base, while NRG continues to see near-term market weakness as the renewable activity resets. Adjusted EBIT dollars were down just over 4%, with price increases and sales volume leverage at Doble unable to offset margin drops at NRG. Next, we have the Test business on page six. Orders here were up 10% in Q1, driven by strong performance at Doble, where orders grew by 15%. orders here were up 10% in q1 driven by strong performance at doble where orders grew by 15% Backlog finished at nearly $155 million, up 8% since September 30th. backlog finished at nearly $155 million up 8% since september 30th Sales in the quarter were up a modest 1%. sales in the quarter were up a modest 1% Doble sales growth of 6% was mostly offset by declines at NRG. doble sales growth of 6% was mostly offset by declines at nrg Doble continues to see good end market activity across a number of product lines serving their regulated utility customer base, while NRG continues to see near-term market weakness as the renewable activity resets. doble continues to see good end market activity across a number of product lines serving their regulated utility customer base while nrg continues to see near-term market weakness as the renewable activity resets Adjusted EBIT dollars were down just over 4%, with price increases and sales volume leverage at Doble unable to offset margin drops at NRG. adjusted ebit dollars were down just over 4% with price increases and sales volume leverage at doble unable to offset margin drops at nrg Next, we have the Test business on page six. next we have the test business on page six This business had a terrific start to fiscal 2026, with orders up over 17% and sales up nearly 27%. This business is seeing robust market activity centered around US test and measurement, industrial shielding, medical shielding, and power filters. Adjusted EBIT margins improved nicely, increasing to 13.8%, which represents an increase of 320 basis points from last year's Q1. The business is leveraging the sales growth nicely and also increasing margins via price increases and cost containment. Going to chart seven, we have cash flow highlights for Q1. Operating cash flow in Q1 was very strong, more than doubling to $68.9 million on a continuing operations basis. This was led by an increase in contract liability to the Navy businesses. This business had a terrific start to fiscal 2026, with orders up over 17% and sales up nearly 27%. this business had a terrific start to fiscal 2026 with orders up over 17% and sales up nearly 27% This business is seeing robust market activity centered around US test and measurement, industrial shielding, medical shielding, and power filters. this business is seeing robust market activity centered around us test and measurement industrial shielding medical shielding and power filters Adjusted EBIT margins improved nicely, increasing to 13.8%, which represents an increase of 320 basis points from last year's Q1. adjusted ebit margins improved nicely increasing to 13.8% which represents an increase of 320 basis points from last year's q1 The business is leveraging the sales growth nicely and also increasing margins via price increases and cost containment. the business is leveraging the sales growth nicely and also increasing margins via price increases and cost containment Going to chart seven, we have cash flow highlights for Q1. going to chart seven we have cash flow highlights for q1 Operating cash flow in Q1 was very strong, more than doubling to $68.9 million on a continuing operations basis. operating cash flow in q1 was very strong more than doubling to $68.9 million on a continuing operations basis This was led by an increase in contract liability to the Navy businesses. this was led by an increase in contract liability to the navy businesses Capital spending increased slightly in the quarter, and there was also a payment of just over $5 million during the quarter for the final working capital settlement related to the ESCO Maritime acquisition last year. Our last chart is number eight, where we have the updated 2026 guidance. With the great start to the year, we're able to substantially increase the 2026 outlook. The sales guidance is increasing by $20 million at the midpoint to a range of $1.29 billion to $1.33 billion. The increase is coming primarily from the Test business, where we had Q1 outperformance in sales and orders, driving up the full-year forecast. Capital spending increased slightly in the quarter, and there was also a payment of just over $5 million during the quarter for the final working capital settlement related to the ESCO Maritime acquisition last year. capital spending increased slightly in the quarter and there was also a payment of just over $5 million during the quarter for the final working capital settlement related to the esco maritime acquisition last year Our last chart is number eight, where we have the updated 2026 guidance. our last chart is number eight where we have the updated 2026 guidance With the great start to the year, we're able to substantially increase the 2026 outlook. with the great start to the year we're able to substantially increase the 2026 outlook The sales guidance is increasing by $20 million at the midpoint to a range of $1.29 billion to $1.33 billion. the sales guidance is increasing by $20 million at the midpoint to a range of $1.29 billion to $1.33 billion The increase is coming primarily from the Test business, where we had Q1 outperformance in sales and orders, driving up the full- year forecast. the increase is coming primarily from the test business where we had q1 outperformance in sales and orders driving up the full- year forecast The original sales guidance for Test was for growth in the range of 3% to 5%, and the updated guide is for revenue growth in the range of 9% to 11%. Additionally, we had a slight increase in the A&D sales outlook. Overall, the sales increase is driving increased adjusted EBIT performance expectations for 2026. Additionally, Q1 tax rate was favorable, and that impact will flow to the full year forecast. This means that full year tax rate projections are now in a range of 23% to 23.5%, compared to 23.7% to 24.1% in the original guidance. All of this drives the full year adjusted earnings per share to a range of $7.90 to $8.15 per share. The original sales guidance for Test was for growth in the range of 3% to 5%, and the updated guide is for revenue growth in the range of 9% to 11%. the original sales guidance for test was for growth in the range of 3% to 5% and the updated guide is for revenue growth in the range of 9% to 11% Additionally, we had a slight increase in the A&D sales outlook. additionally we had a slight increase in the a&d sales outlook Overall, the sales increase is driving increased adjusted EBIT performance expectations for 2026. overall the sales increase is driving increased adjusted ebit performance expectations for 2026 Additionally, Q1 tax rate was favorable, and that impact will flow to the full year forecast. additionally q1 tax rate was favorable and that impact will flow to the full year forecast This means that full year tax rate projections are now in a range of 23% to 23.5%, compared to 23.7% to 24.1% in the original guidance. this means that full year tax rate projections are now in a range of 23% to 23.5% compared to 23.7% to 24.1% in the original guidance All of this drives the full year adjusted earnings per share to a range of $7.90 to $8.15 per share. all of this drives the full year adjusted earnings per share to a range of $7.90 to $8.15 per share Compared to the prior guidance range, this is an increase of $0.38 per share at the midpoint and represents growth of 31% to 35% compared to 2025 adjusted earnings per share. The original outlook represented a strong growth plan for ESCO, and we are pleased to share this increased forecast, representing an even stronger growth trajectory. That completes the financial summary, and now I'll turn it back over to Bryan. Compared to the prior guidance range, this is an increase of $0.38 per share at the midpoint and represents growth of 31% to 35% compared to 2025 adjusted earnings per share. compared to the prior guidance range this is an increase of $0.38 per share at the midpoint and represents growth of 31% to 35% compared to 2025 adjusted earnings per share The original outlook represented a strong growth plan for ESCO, and we are pleased to share this increased forecast, representing an even stronger growth trajectory. the original outlook represented a strong growth plan for esco and we are pleased to share this increased forecast representing an even stronger growth trajectory That completes the financial summary, and now I'll turn it back over to Bryan. that completes the financial summary and now i'll turn it back over to bryan

Speaker 1: Thanks, Chris. As you've heard from our commentary, Q1 was a great start to the year. Robust orders and strong execution have put us in a position to raise our outlook for the full year. With that, we're finished with our prepared remarks and can turn it over to the Q&A. Thanks, Chris. thanks chris As you've heard from our commentary, Q1 was a great start to the year. as you've heard from our commentary q1 was a great start to the year Robust orders and strong execution have put us in a position to raise our outlook for the full year. robust orders and strong execution have put us in a position to raise our outlook for the full year With that, we're finished with our prepared remarks and can turn it over to the Q&A. with that we're finished with our prepared remarks and can turn it over to the q&a

Speaker 5: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. The first question today will come from the line of Tommy Moll of Stephens. Your line is open. Thank you. thank you As a reminder, if you would like to ask a question, please press star one on your telephone. as a reminder if you would like to ask a question please press star one on your telephone We also ask that you wait for your name and company to be announced before proceeding with your question. we also ask that you wait for your name and company to be announced before proceeding with your question One moment while we compile the Q&A roster. one moment while we compile the q&a roster The first question today will come from the line of Tommy Moll of Stephens. the first question today will come from the line of tommy moll of stephens Your line is open. your line is open

Speaker 6: Good afternoon, and thanks for taking my questions. Good afternoon, and thanks for taking my questions. good afternoon and thanks for taking my questions

Speaker 1: Hey, Tommy. Hey, Tommy. hey tommy

Speaker 6: Bryan, my first question is on the A&D orders. To the extent you can comment on ship set content on either side of the Atlantic, if there's any updates there, we'd appreciate it. And maybe bigger picture on orders. You know, last quarter's 0.83 book-to-bill was clearly not the right level. This quarter's 2.66 is probably not a sustainable level. But how would you... Just give us, give us something about some kind of enduring takeaway here on the state of affairs there. Bryan, my first question is on the A&D orders. bryan my first question is on the a&d orders To the extent you can comment on ship set content on either side of the Atlantic, if there's any updates there, we'd appreciate it. to the extent you can comment on ship set content on either side of the atlantic if there's any updates there we'd appreciate it And maybe bigger picture on orders. and maybe bigger picture on orders You know, last quarter's 0.83 book-to-bill was clearly not the right level. you know last quarter's 0.83 book-to-bill was clearly not the right level This quarter's 2.66 is probably not a sustainable level. this quarter's 2.66 is probably not a sustainable level But how would you... but how would you Just give us, give us something about some kind of enduring takeaway here on the state of affairs there. just give us give us something about some kind of enduring takeaway here on the state of affairs there

Speaker 1: Well, I'll take the last piece first, and that is, I think the enduring takeaway is that, the long-term demand in all of these markets, is really, really good. I think we've signaled a number of times that, Navy, in particular, is gonna be very lumpy. I think we mentioned in November's conference call that we had a large, you know, $200 million order in the UK that came through. Unfortunately, the way that, the MOD, thinks about those things, we're not really in a position to be able to give you specifics on platforms or, or our content there. So, I would not be able to give you a lot of detail there. Well, I'll take the last piece first, and that is, I think the enduring takeaway is that, the long-term demand in all of these markets, is really, really good. well i'll take the last piece first and that is i think the enduring takeaway is that the long-term demand in all of these markets is really really good I think we've signaled a number of times that, Navy, in particular, is gonna be very lumpy. i think we've signaled a number of times that navy in particular is gonna be very lumpy I think we mentioned in November's conference call that we had a large, you know, $200 million order in the UK that came through. i think we mentioned in november's conference call that we had a large you know $200 million order in the uk that came through Unfortunately, the way that, the MOD, thinks about those things, we're not really in a position to be able to give you specifics on platforms or, or our content there. unfortunately the way that the mod thinks about those things we're not really in a position to be able to give you specifics on platforms or or our content there So, I would not be able to give you a lot of detail there. so i would not be able to give you a lot of detail there I'd say over on the US side, we also received in the quarter about $30 million in orders for Virginia-class Block VI. We would expect that to kind of be continuing, but again, that's gonna come in big chunks, and so that's gonna be kind of lumpy, and it's not always gonna be in the same quarter every year. So the year-over-year, quarter-to-quarter comparisons aren't really great. I think the other big story here is that we really did see pretty robust return to orders from our aerospace OEMs. I'd say over on the US side, we also received in the quarter about $30 million in orders for Virginia-class Block VI. i'd say over on the us side we also received in the quarter about $30 million in orders for virginia-class block vi We would expect that to kind of be continuing, but again, that's gonna come in big chunks, and so that's gonna be kind of lumpy, and it's not always gonna be in the same quarter every year. we would expect that to kind of be continuing but again that's gonna come in big chunks and so that's gonna be kind of lumpy and it's not always gonna be in the same quarter every year So the year-over-year, quarter-to-quarter comparisons aren't really great. so the year-over-year quarter-to-quarter comparisons aren't really great I think the other big story here is that we really did see pretty robust return to orders from our aerospace OEMs. i think the other big story here is that we really did see pretty robust return to orders from our aerospace oems You know, 2025 was kind of a year that was a little soft on the order side, as, you know, build rates were kind of stable, and there seemed to be a lot of management of inventory going on in the supply chain. But we think that they're kind of through that. We're really encouraged to see Boeing and the other OEMs kind of getting their build rates up, and we're starting to see that come through on our order book. I'd also say there was a pretty good, pretty good amount of military aircraft activity in the quarter as well. You know, 2025 was kind of a year that was a little soft on the order side, as, you know, build rates were kind of stable, and there seemed to be a lot of management of inventory going on in the supply chain. you know 2025 was kind of a year that was a little soft on the order side as you know build rates were kind of stable and there seemed to be a lot of management of inventory going on in the supply chain But we think that they're kind of through that. but we think that they're kind of through that We're really encouraged to see Boeing and the other OEMs kind of getting their build rates up, and we're starting to see that come through on our order book. we're really encouraged to see boeing and the other oems kind of getting their build rates up and we're starting to see that come through on our order book I'd also say there was a pretty good, pretty good amount of military aircraft activity in the quarter as well. i'd also say there was a pretty good pretty good amount of military aircraft activity in the quarter as well You know, that's something that is more stable, probably will be lumpy, through a, you know, four-quarter cycle, but generally speaking, will be pretty repetitive on a year-to-year basis with, a little bit of growth. You know, that's something that is more stable, probably will be lumpy, through a, you know, four-quarter cycle, but generally speaking, will be pretty repetitive on a year-to-year basis with, a little bit of growth. you know that's something that is more stable probably will be lumpy through a you know four-quarter cycle but generally speaking will be pretty repetitive on a year-to-year basis with a little bit of growth

Speaker 6: Bryan, if I could stay on A&D for another question. Bryan, if I could stay on A&D for another question. bryan if i could stay on a&d for another question

Speaker 1: Sure. Sure. sure

Speaker 6: Just looking at the results in Q1 and the guide for the year, I'm talking revenue now. Just looking at the results in Q1 and the guide for the year, I'm talking revenue now. just looking at the results in q1 and the guide for the year i'm talking revenue now

Speaker 1: Yeah. Yeah. yeah

Speaker 6: It looks conservative at first glance. I mean, you raised it from a seven to an eight at the midpoint, but you started the year in the teens on a pretty tough comp. So maybe walk me back from that assumption if there's something I'm missing here. It looks conservative at first glance. it looks conservative at first glance I mean, you raised it from a seven to an eight at the midpoint, but you started the year in the teens on a pretty tough comp. i mean you raised it from a seven to an eight at the midpoint but you started the year in the teens on a pretty tough comp So maybe walk me back from that assumption if there's something I'm missing here. so maybe walk me back from that assumption if there's something i'm missing here

Speaker 2: Yeah, Tommy, this is Chris. You know, I would say that, you know, we do expect that Q1 is gonna be the strongest growth, and we would expect to still see solid growth through the year, but maybe kind of tapering down a little bit. And then when we get to Q4, we have, you know, kind of lower growth overall. Again, I think that's a function of the comps a little bit. So you know, we still see a nice high single-digit outlook there in the core business, but you know, understanding it's a little bit front-end loaded. Yeah, Tommy, this is Chris. yeah tommy this is chris You know, I would say that, you know, we do expect that Q1 is gonna be the strongest growth, and we would expect to still see solid growth through the year, but maybe kind of tapering down a little bit. you know i would say that you know we do expect that q1 is gonna be the strongest growth and we would expect to still see solid growth through the year but maybe kind of tapering down a little bit And then when we get to Q4, we have, you know, kind of lower growth overall. and then when we get to q4 we have you know kind of lower growth overall Again, I think that's a function of the comps a little bit. again i think that's a function of the comps a little bit So you know, we still see a nice high single-digit outlook there in the core business, but you know, understanding it's a little bit front-end loaded. so you know we still see a nice high single-digit outlook there in the core business but you know understanding it's a little bit front-end loaded

Speaker 6: Thank you both. I'll turn it back. Thank you both. thank you both I'll turn it back. i'll turn it back

Speaker 5: Thank you. One moment for the next question. The next question will be coming from the line of Jon Tanwanteng of CJS Securities. Your line is open. Thank you. thank you One moment for the next question. one moment for the next question The next question will be coming from the line of Jon Tanwanteng of CJS Securities. the next question will be coming from the line of jon tanwanteng of cjs securities Your line is open. your line is open

Speaker 3: Hi, thank you for taking my questions and a really great quarter and outlook, guys. If you could start. if you could start, what's driving the strength in Test, and how did that change so quickly, in the span of 90 days? Hi, thank you for taking my questions and a really great quarter and outlook, guys. hi thank you for taking my questions and a really great quarter and outlook guys If you could start. if you could start, what's driving the strength in Test, and how did that change so quickly, in the span of 90 days? if you could start if you could start what's driving the strength in test and how did that change so quickly in the span of 90 days

Speaker 1: Listen, a lot of our traditional core markets, you know, particularly like electromagnetic compatibility, you know, medical shielding, those really came back, very, very strong, this year, or this quarter, I would say. We won a couple of pretty good-sized orders, and that's really, you know, because it happened earlier in the year, we're gonna see a lot of that come through, as revenue, within the year. I would also say that we're starting—you know, we've seen kind of a return to, you know, regular orders from our EMP filter product line that supports, you know, some of the government data centers and that sort of thing. So, just a pretty broad base. Listen, a lot of our traditional core markets, you know, particularly like electromagnetic compatibility, you know, medical shielding, those really came back, very, very strong, this year, or this quarter, I would say. listen a lot of our traditional core markets you know particularly like electromagnetic compatibility you know medical shielding those really came back very very strong this year or this quarter i would say We won a couple of pretty good-sized orders, and that's really, you know, because it happened earlier in the year, we're gonna see a lot of that come through, as revenue, within the year. we won a couple of pretty good-sized orders and that's really you know because it happened earlier in the year we're gonna see a lot of that come through as revenue within the year I would also say that we're starting—you know, we've seen kind of a return to, you know, regular orders from our EMP filter product line that supports, you know, some of the government data centers and that sort of thing. i would also say that we're starting—you know we've seen kind of a return to you know regular orders from our emp filter product line that supports you know some of the government data centers and that sort of thing So, just a pretty broad base. so just a pretty broad base I would tell you the one area that we're still not, you know, feeling a love on is the wireless business. I mean, it we did see a little bit of growth there, but it's coming off a very low base. So that's the one area where we're probably still looking for some recovery. But I would say overall, quite good. A little bit of A&D in there, some microwave stuff, so really good, good. And I would say Europe and the US were the two big leaders there. I would tell you the one area that we're still not, you know, feeling a love on is the wireless business. i would tell you the one area that we're still not you know feeling a love on is the wireless business I mean, it we did see a little bit of growth there, but it's coming off a very low base. i mean it we did see a little bit of growth there but it's coming off a very low base So that's the one area where we're probably still looking for some recovery. so that's the one area where we're probably still looking for some recovery But I would say overall, quite good. but i would say overall quite good A little bit of A&D in there, some microwave stuff, so really good, good. a little bit of a&d in there some microwave stuff so really good good And I would say Europe and the US were the two big leaders there. and i would say europe and the us were the two big leaders there

Speaker 3: Got it. Thank you. And then, are you within sight of the trough of the energy business, or do you think that's gonna extend a little further out? Got it. got it Thank you. thank you And then, are you within sight of the trough of the energy business, or do you think that's gonna extend a little further out? and then are you within sight of the trough of the energy business or do you think that's gonna extend a little further out

Speaker 1: Yeah, listen, I think that what we believe about that is that the focus for all of the developers in the US is really they're hyper-focused on kind of getting as much done on their existing projects by the end of July, so that they can qualify as much of that as possible for those tax credits. And so, you know, a lot of our content's already been delivered on some of those projects, and so that's, you know, that's leading them to make lower investments right now on new projects. But we expect that that's gonna kind of revert in the second half of 2026. So it might be in our Q4, it might be in Q1 of next year. Yeah, listen, I think that what we believe about that is that the focus for all of the developers in the US is really they're hyper-focused on kind of getting as much done on their existing projects by the end of July, so that they can qualify as much of that as possible for those tax credits. yeah listen i think that what we believe about that is that the focus for all of the developers in the us is really they're hyper-focused on kind of getting as much done on their existing projects by the end of july so that they can qualify as much of that as possible for those tax credits And so, you know, a lot of our content's already been delivered on some of those projects, and so that's, you know, that's leading them to make lower investments right now on new projects. and so you know a lot of our content's already been delivered on some of those projects and so that's you know that's leading them to make lower investments right now on new projects But we expect that that's gonna kind of revert in the second half of 2026. but we expect that that's gonna kind of revert in the second half of 2026 So it might be in our Q4, it might be in Q1 of next year. so it might be in our q4 it might be in q1 of next year That's when we think that things are gonna kind of return to what we would call normal growth, which would be kind of high single digits, kind of like our regulated utility business operates. So please remember, John, that, you know, after the Inflation Reduction Act was put in place, you know, that whole market kind of got turbocharged for two or three years, and now they're kind of, you know, you know, getting off that sugar high from all those tax incentives, and it's gonna take them, you know, a couple more months to kind of get back into the pocket and really making good decisions. That's when we think that things are gonna kind of return to what we would call normal growth, which would be kind of high single digits, kind of like our regulated utility business operates. that's when we think that things are gonna kind of return to what we would call normal growth which would be kind of high single digits kind of like our regulated utility business operates So please remember, John, that, you know, after the Inflation Reduction Act was put in place, you know, that whole market kind of got turbocharged for two or three years, and now they're kind of, you know, you know, getting off that sugar high from all those tax incentives, and it's gonna take them, you know, a couple more months to kind of get back into the pocket and really making good decisions. so please remember john that you know after the inflation reduction act was put in place you know that whole market kind of got turbocharged for two or three years and now they're kind of you know you know getting off that sugar high from all those tax incentives and it's gonna take them you know a couple more months to kind of get back into the pocket and really making good decisions The renewables business, you know, will have a big role to play because it is very cost effective, relatively easy to deploy, and the assets are available, and those are all characteristics that utilities are looking for. The renewables business, you know, will have a big role to play because it is very cost effective, relatively easy to deploy, and the assets are available, and those are all characteristics that utilities are looking for. the renewables business you know will have a big role to play because it is very cost effective relatively easy to deploy and the assets are available and those are all characteristics that utilities are looking for

Speaker 3: Got it. Thank you. And then last one, if I could. Just the large orders of the Maritime business, can you just talk about how those layer in over the next couple of years, and if that's an acceleration of the growth rate, or if that's in line with what your expectations were? Got it. got it Thank you. thank you And then last one, if I could. and then last one if i could Just the large orders of the Maritime business, can you just talk about how those layer in over the next couple of years, and if that's an acceleration of the growth rate, or if that's in line with what your expectations were? just the large orders of the maritime business can you just talk about how those layer in over the next couple of years and if that's an acceleration of the growth rate or if that's in line with what your expectations were

Speaker 1: Yeah, I would say it, it's in line, you know, kind of since we've owned the company. You know, we closed the deal at the end of April, and so these were kind of the expectations were that this order would come in. As far as how that layers in, I would say we would get a little revenue starting in Q4, and then you'll start to see it kind of kick in more in 2027 and 2028. So these are, you know, these are long-term contracts and programs, that really kind of help solidify the outlook for 2027 and beyond, I would say. So that's kind of how we're thinking about them, and really not much of a revenue impact this year, although there will be a little bit towards the end of the year. Yeah, I would say it, it's in line, you know, kind of since we've owned the company. yeah i would say it it's in line you know kind of since we've owned the company You know, we closed the deal at the end of April, and so these were kind of the expectations were that this order would come in. you know we closed the deal at the end of april and so these were kind of the expectations were that this order would come in As far as how that layers in, I would say we would get a little revenue starting in Q4, and then you'll start to see it kind of kick in more in 2027 and 2028. as far as how that layers in i would say we would get a little revenue starting in q4 and then you'll start to see it kind of kick in more in 2027 and 2028 So these are, you know, these are long-term contracts and programs, that really kind of help solidify the outlook for 2027 and beyond, I would say. so these are you know these are long-term contracts and programs that really kind of help solidify the outlook for 2027 and beyond i would say So that's kind of how we're thinking about them, and really not much of a revenue impact this year, although there will be a little bit towards the end of the year. so that's kind of how we're thinking about them and really not much of a revenue impact this year although there will be a little bit towards the end of the year

Speaker 3: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 5: Thank you. One moment. We do have a follow-up question, and that question is coming from the line of Tommy Moll. Stephens, your line is open. Thank you. thank you One moment. one moment We do have a follow-up question, and that question is coming from the line of Tommy Moll. we do have a follow-up question and that question is coming from the line of tommy moll Stephens, your line is open. stephens your line is open

Speaker 6: Thanks for a follow-up question here. I had to ask on capital allocation, you'll look, not too long from now on, potentially have a net cash balance sheet. So I'm just curious what comments you can make on, M&A funnel or capital allocation more broadly. Thank you. Thanks for a follow-up question here. thanks for a follow-up question here I had to ask on capital allocation, you'll look, not too long from now on, potentially have a net cash balance sheet. i had to ask on capital allocation you'll look not too long from now on potentially have a net cash balance sheet So I'm just curious what comments you can make on, M&A funnel or capital allocation more broadly. so i'm just curious what comments you can make on m&a funnel or capital allocation more broadly Thank you. thank you

Speaker 1: Yeah, yeah. Well, listen, I think, with the sale of the, the VACCO business and the completion of the Maritime business, and that integration is kind of going pretty well, our cash flow really has been outstanding, and, you know, our leverage is pretty low. We are actively rebuilding a pipeline of M&A opportunities. The market looks pretty healthy, and we do see a number of different prospects on the horizon. Nothing we can announce, you know, at this point in time, but, you know, we do have a couple of good things that we could get something done this year. So that's really our primary focus for a deployment of capital, would be to continue to add good, fit, strategic acquisitions. Yeah, yeah. yeah yeah Well, listen, I think, with the sale of the, the VACCO business and the completion of the Maritime business, and that integration is kind of going pretty well, our cash flow really has been outstanding, and, you know, our leverage is pretty low. well listen i think with the sale of the the vacco business and the completion of the maritime business and that integration is kind of going pretty well our cash flow really has been outstanding and you know our leverage is pretty low We are actively rebuilding a pipeline of M&A opportunities. we are actively rebuilding a pipeline of m&a opportunities The market looks pretty healthy, and we do see a number of different prospects on the horizon. the market looks pretty healthy and we do see a number of different prospects on the horizon Nothing we can announce, you know, at this point in time, but, you know, we do have a couple of good things that we could get something done this year. nothing we can announce you know at this point in time but you know we do have a couple of good things that we could get something done this year So that's really our primary focus for a deployment of capital, would be to continue to add good, fit, strategic acquisitions. so that's really our primary focus for a deployment of capital would be to continue to add good fit strategic acquisitions I think that we're gonna continue to be, a little bit picky, focused primarily on our utility segment, our aircraft components segment, and our, Navy segment, where, you know, we think we understand those markets pretty well, and they are, they're all markets that have really good long-term secular growth, characteristics. So that's kind of where our focus is right now. I think that we're gonna continue to be, a little bit picky, focused primarily on our utility segment, our aircraft components segment, and our, Navy segment, where, you know, we think we understand those markets pretty well, and they are, they're all markets that have really good long-term secular growth, characteristics. i think that we're gonna continue to be a little bit picky focused primarily on our utility segment our aircraft components segment and our navy segment where you know we think we understand those markets pretty well and they are they're all markets that have really good long-term secular growth characteristics So that's kind of where our focus is right now. so that's kind of where our focus is right now

Speaker 6: Thank you, Bryan. That's all from me. Thank you, Bryan. thank you bryan That's all from me. that's all from me

Speaker 5: Thank you. We have a follow-up question from the line of Jon Tanwanteng of CJS. Your line is open. Thank you. thank you We have a follow-up question from the line of Jon Tanwanteng of CJS. we have a follow-up question from the line of jon tanwanteng of cjs Your line is open. your line is open

Speaker 3: Thanks for the follow-up. I was wondering if you could talk a little bit more about the military business in the A&D segment that is not Navy. You mentioned strength in military aircraft. Just wondering where that's coming from, number one, and if there's anything outside of that, maybe drones or munitions, that's driving some strength there. Thanks for the follow-up. thanks for the follow-up I was wondering if you could talk a little bit more about the military business in the A&D segment that is not Navy. i was wondering if you could talk a little bit more about the military business in the a&d segment that is not navy You mentioned strength in military aircraft. you mentioned strength in military aircraft Just wondering where that's coming from, number one, and if there's anything outside of that, maybe drones or munitions, that's driving some strength there. just wondering where that's coming from number one and if there's anything outside of that maybe drones or munitions that's driving some strength there

Speaker 1: Yeah, I'd say it's pretty broad-based. But a couple of highlights there. You know, you would've seen in the 2025 reconciliation bill that they put a lot of money out there. They're buying 21 of the F-15EX fighters. That's a platform that we have a lot of content on. You know, there's a lot going on with regard to the sixth generation fighter platform, the F-47. And you know, that's been a positive story for us. So yeah, there's a lot of good things going on, but I would say yeah, the traditional kind of F-35 missile programs, all those things are all kind of coming through for us. Yeah, I'd say it's pretty broad-based. yeah i'd say it's pretty broad-based But a couple of highlights there. but a couple of highlights there You know, you would've seen in the 2025 reconciliation bill that they put a lot of money out there. you know you would've seen in the 2025 reconciliation bill that they put a lot of money out there They're buying 21 of the F-15EX fighters. they're buying 21 of the f-15ex fighters That's a platform that we have a lot of content on. that's a platform that we have a lot of content on You know, there's a lot going on with regard to the sixth generation fighter platform, the F-47. you know there's a lot going on with regard to the sixth generation fighter platform the f-47 And you know, that's been a positive story for us. and you know that's been a positive story for us So yeah, there's a lot of good things going on, but I would say yeah, the traditional kind of F-35 missile programs, all those things are all kind of coming through for us. so yeah there's a lot of good things going on but i would say yeah the traditional kind of f-35 missile programs all those things are all kind of coming through for us

Speaker 3: Got it. Thank you. And then just for the broader airplane business, the commercial side, how closely does your guidance, I guess, mirror the targeted production rates at the OEMs, or are you still giving them a little cushion in your outlook? Got it. got it Thank you. thank you And then just for the broader airplane business, the commercial side, how closely does your guidance, I guess, mirror the targeted production rates at the OEMs, or are you still giving them a little cushion in your outlook? and then just for the broader airplane business the commercial side how closely does your guidance i guess mirror the targeted production rates at the oems or are you still giving them a little cushion in your outlook

Speaker 1: No, we still have cushion. I think that, you know, you know, we follow, you know, our OEM partners very, very closely. But I think that we have our own opinion, which is probably modestly skeptical of their ability to get to reach their targets. And so when we are communicating, you know, to you, you know, I think you should assume there's a little bit of discount on there, which, you know, listen, if they're successful, then that's gonna be all upside for us still. No, we still have cushion. no we still have cushion I think that, you know, you know, we follow, you know, our OEM partners very, very closely. i think that you know you know we follow you know our oem partners very very closely But I think that we have our own opinion, which is probably modestly skeptical of their ability to get to reach their targets. but i think that we have our own opinion which is probably modestly skeptical of their ability to get to reach their targets And so when we are communicating, you know, to you, you know, I think you should assume there's a little bit of discount on there, which, you know, listen, if they're successful, then that's gonna be all upside for us still. and so when we are communicating you know to you you know i think you should assume there's a little bit of discount on there which you know listen if they're successful then that's gonna be all upside for us still

Speaker 3: Got it. Thank you, guys. Got it. got it Thank you, guys. thank you guys

Speaker 1: Thanks, John. Thanks, John. thanks john

Speaker 5: Thank you. Thank you, and this concludes today's Q&A session. I would like to turn the call back over to Bryan for closing remarks. Please go ahead. Thank you. thank you Thank you, and this concludes today's Q&A session. thank you and this concludes today's q&a session I would like to turn the call back over to Bryan for closing remarks. i would like to turn the call back over to bryan for closing remarks Please go ahead. please go ahead

Speaker 1: Well, listen, thanks for taking a little bit of time to hear about our Q1. We're pretty excited about the results and probably more excited about our growth prospects going forward. So we'll look forward to talking to you again next quarter. Well, listen, thanks for taking a little bit of time to hear about our Q1. well listen thanks for taking a little bit of time to hear about our q1 We're pretty excited about the results and probably more excited about our growth prospects going forward. we're pretty excited about the results and probably more excited about our growth prospects going forward So we'll look forward to talking to you again next quarter. so we'll look forward to talking to you again next quarter

Speaker 5: Thank you for joining today's program. You may all disconnect. Thank you for joining today's program. thank you for joining today's program You may all disconnect. you may all disconnect