ESCO Technologies Q3 2025 Earnings Call Transcript

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Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Completed Maritime acquisition and exited VACCO divestiture, enhancing navy market presence and refining aerospace & defense focus.
  • Positive Sentiment: Aerospace & Defense revenue rose ~20% in Q3 with a record $832 M backlog, 560 bps margin expansion, driven by Virginia and Columbia class submarine orders.
  • Neutral Sentiment: Utility Solutions Group saw 5.5% order growth but flat sales and margins in Q3, while underlying demand drivers for grid expansion remain intact.
  • Positive Sentiment: Test business delivered 21% revenue growth and sequential margin improvement, stabilizing operations with mid‐teens EBIT margins.
  • Positive Sentiment: Full‐year guidance raised to reflect over 20% adjusted EPS growth despite tariff headwinds and portfolio changes.
AI Generated. May Contain Errors.
Earnings Conference Call
ESCO Technologies Q3 2025
00:00 / 00:00

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Operator

Good day, and thank you for standing by. Welcome to the Q3 twenty twenty five ESCO Technologies Earnings Conference Call. With us today are Brian Saylor, President and CEO Chris Tucker, Senior VP and CFO and Kate Lowry, Vice President of Investor Relations. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Kate Lowry. Please go ahead.

Kate Lowrey
Director - IR at ESCO

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 included as an exhibit to the company's Form eight ks to be 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.

Kate Lowrey
Director - IR at ESCO

A reconciliation of these measures to their 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 Brian.

Bryan Sayler
President, CEO & Director at ESCO

Thanks, Kate, and thanks, everyone, for joining today's call. The past few months have been a transformative period for ESCO. Early in the third quarter, we completed the Maritime acquisition. And after the close of the third quarter, we finalized the VACCO divestiture. The completion of these key transactions marks an important step forward in the execution of our portfolio strategy.

Bryan Sayler
President, CEO & Director at ESCO

With the addition of Maritime's signature and power management solutions, we now have a meaningfully larger presence in the navy market. Maritime broadens our product offerings and adds significant US and UK naval platform content. With the exit of the space market, our aerospace and defense segment now has a clearer focus on serving the aircraft and navy end markets, both of which we believe have durable long term growth drivers in place. This period of transition has involved an extraordinary level of hard work from our team members related to closing these deals and integrating Maritime into the ESCO portfolio and business system. In addition to supporting these efforts, our team was also busy managing day to day operations and delivered another outstanding quarter for ESCO.

Bryan Sayler
President, CEO & Director at ESCO

I wanna personally acknowledge and thank our dedicated employees whose hard work is what makes this possible. In addition, I would like to take one more opportunity to welcome our new ESCO Maritime teammates in both The US and The UK. As we've now had a number of interactions with the Maritime team, it is clear that they are a strong group that is dedicated to a very important mission, which is aligned with ESCO and our core values. We are thrilled to welcome them to the team. I would also like to thank the maritime staff for their hard work in supporting the ongoing integration, which does require considerable time and focus from across the organization.

Bryan Sayler
President, CEO & Director at ESCO

As I know we are all aware, the macroeconomic picture has been somewhat complicated this year with evolving trade policies and geopolitical uncertainty in the headlines. It's difficult to know exactly how these impacts will play out, but we are monitoring these changing dynamics closely and believe our teams have done a good job of managing the risks and opportunities to this point. While there have been some additional costs, we have been able to mitigate the impacts and deliver exceptional operating results. Going forward, we are in good shape in this regard and are confident in our ability to manage any potential future risks associated with tariffs during the balance of the year. Chris will run you through all of the financial details for the quarter.

Bryan Sayler
President, CEO & Director at ESCO

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. We remain very positive regarding the long term outlook for the aerospace and navy markets. Production rates across both end markets need to increase to meet underlying customer and market demand. We see fundamental drivers for additional commercial and defense aircraft and expect increasing production rates to drive growth going forward.

Bryan Sayler
President, CEO & Director at ESCO

Overall, our aerospace revenue was up almost 20% in the quarter and is up 15% on a year to date basis. On the navy side, we've been talking for a while about the procurement process for the next 17 Virginia and Columbia class submarines. It's taken a little bit longer than expected, but it was great to see those orders begin to flow through during q three with Globe booking over 80,000,000 in orders during the quarter for block 5.2 and block six on the Virginia class platform along with orders for initial content on the next three Columbia class boats. By any measure, the A and D segment has had an exceptional quarter, achieving double digit organic growth, a five sixty basis point increase in margin, and ending the period with record backlog. Switching businesses now, let's discuss the utility group, which had a bit of a flattish quarter from a sales and margin perspective, but did experience strong orders.

Bryan Sayler
President, CEO & Director at ESCO

If you look at the year to date results, the story remains quite positive, and we are confident that the long term demand drivers remain intact. Numerous factors are contributing to the growing demand for electricity, including data centers, artificial intelligence, electrification of transportation, heat pumps, reshoring activities, and more. Expanding the grid will be a long term and complicated endeavor. And during that process, increased electricity demand coupled with an aging infrastructure and extreme weather events will make maintaining utility assets more important than ever. Doble will continue to be a critical partner supporting the utilities as they both maintain and expand the grid.

Bryan Sayler
President, CEO & Director at ESCO

Order growth in the quarter was strong, which points to continued sales momentum in the quarters to come. The US renewables market continues to recalibrate right now in the wake of the big beautiful bill. Our team is managing well through some uncertainty, and we remain confident that renewables will continue to have an important role to play in energy markets worldwide and in The US over the long term. Finally, I'll touch on the test business, which had another strong revenue quarter with 21% growth over the prior year. Year to date, the revenue is up by 15%, and it's great to see continuing strength in their test and measurement, industrial shielding, and services sales this year.

Bryan Sayler
President, CEO & Director at ESCO

Their margins improved by 350 basis points sequentially, but were down a bit year over year. The team has taken the right steps to reduce costs over the past several quarters and has done a great job driving the segment EBIT margin back into the mid teens. Overall, the test business has stabilized, and we feel good about the trajectory there moving forward. Overall, we are optimistic about our market positions across each of our segments and expect to outperform industry growth. Accordingly, we are again raising our full year guidance, which reflects over 20% adjusted EPS growth compared to the prior year.

Bryan Sayler
President, CEO & Director at ESCO

With that, I'll turn it over to Chris to run you through the financial details of the quarter.

Chris Tucker
SVP & CFO at ESCO

Thanks, Brian. Everyone can follow along on the chart presentation. We will start on page three, which shows the financial highlights for the quarter. Before jumping into the numbers, I do want to point out that we are looking at everything on a continuing operations basis. Now that VACCO has been sold, it has been classified as a discontinued operation in our financial statements, so the commentary will exclude any P and L impacts for discontinued operations.

Chris Tucker
SVP & CFO at ESCO

Now turning to the numbers, you can see that by all measures, ESCO delivered a great quarter. Orders showed a significant increase in the quarter. We will go through segment details coming up, but a big driver of the reported increase relates to the acquired backlog at Maritime. Excluding that, we still had good orders performance with a 1.3 book to bill ratio. We ended Q3 with backlog of nearly $1,200,000,000 a new record for ESCO.

Chris Tucker
SVP & CFO at ESCO

Sales performance was also strong with growth in the quarter of nearly 27% on a reported basis and 11% on an organic basis, which excludes the impact of the Maritime acquisition. Adjusted EBIT margins increased from 19.3% last year to 21.1% in this year's third quarter. Lastly, adjusted earnings per share increased by 25% to $1.6 per share. I would also point out on the bottom right of the chart that we did have sizable a sizable amount of add backs for adjusted earnings. This was driven by the Maritime acquisition where we had significant costs related to closing of the deal as well as inventory step up charges, stamp duties in The UK, and an increase in acquisition related amortization.

Chris Tucker
SVP & CFO at ESCO

Next, we will go through the segment highlights starting with aerospace and defense. Orders increased significantly, but you can see that $364,000,000 of it related to the backlog acquired at Maritime. Beyond that, Maritime delivered another $50,000,000 of orders in the two months they were owned by ESCO. On an organic basis, orders were also quite strong with Globe receiving large Virginia and Columbia class orders. Backlog for A and D finished at $832,000,000 From a sales perspective, growth was up 56% on a reported basis and 14% organically.

Chris Tucker
SVP & CFO at ESCO

You can see the maritime impact was significant, but the core business also performed very well. This translated nicely to margins, which increased over 500 basis points with positive contributions from across this set of businesses. The margin increase was due to favorable impacts from price, mix, and leverage on the growth. Moving on to chart five, we have the Utility Solutions Group. Orders momentum remained healthy with growth of 5.5% in the quarter.

Chris Tucker
SVP & CFO at ESCO

This was driven by Doble, where orders increased nearly 7%, while NRG orders in the quarter were flat. On the sales side, growth was a bit more muted with only 2% growth. This lower growth was also driven by Doble, where timing of shipments resulted in lower revenue growth in the third quarter. We see this as a temporary issue and expect to return to higher growth in the fourth quarter. As you can see on the chart, backlogs are healthy and have increased nearly 15% compared to prior year end.

Chris Tucker
SVP & CFO at ESCO

On the margin story on the margin front, the story is similar to sales with the margin drop in the quarter driven by Doble. On a year to date basis, the Utility Solutions Group has delivered adjusted EBIT margins that are 130 basis points ahead of last year's first nine months. So while we have seen some weakness from NRG in the year, the double performance has been strong and we feel good about the full year outlook there. Next, will cover test where the team delivered another strong quarter. Starting with orders, where we did see a decline of nearly 6% in the quarter.

Chris Tucker
SVP & CFO at ESCO

We had some tough comparisons to last year, but honestly feel good about where the business is trending. Year to date orders are up over 30%, and you can see that backlogs are up nearly 24% compared to year end. So the momentum here has been strong during 2025. Sales were very good with a 20.7% increase, which drove adjusted EBIT to increase by 15.4%. Margins here were down slightly as we've experienced unfavorable mix and some tariff impacts.

Chris Tucker
SVP & CFO at ESCO

Year to date margins are up 140 basis points, so 2025 has been a positive step for this business after a couple of tough years in 2023 and 2024. Moving to chart number seven, we have year to date p and l highlights. As you can see, the results have been terrific through the first nine months of 2025. Brian mentioned all the portfolio work earlier, which is very important. This chart shows that the core company has continued to deliver and we are now starting to see the impacts of the Maritime deal come through.

Chris Tucker
SVP & CFO at ESCO

Orders have been great. If you take out the Maritime backlog impact, we have growth of 17. The sales story is also quite positive with A and D up 12% organically and nearly 28% when Maritime is added in. Test sales are up 15%, while The US growth USG growth is a bit more modest at 4% due to weakness for NRG so far this year. Earnings are up double digits with adjusted EBIT margins increasing by 200 basis points and all three segments posting nice margin improvement over the first three quarters of the year.

Chris Tucker
SVP & CFO at ESCO

Finally, adjusted earnings per share is up over 24%. So by any measure, the company has performed very well year to date in 2025. Next is chart eight, where we have cash flow highlights. The first nine months of fiscal twenty twenty five delivered strong operating cash flow results as working capital performance has been favorable compared to the first nine months of 2024. This is true for continuing operations and it should be noted that the cash flow for discontinued operations was also quite strong through the first nine months of fiscal twenty twenty five.

Chris Tucker
SVP & CFO at ESCO

Capital spending is up for the first nine months due to various programs in the A and D and utility businesses. Our strong cash generation and the delay in getting the Maritime deal closed means that our leverage position is in good shape as of June 30 at 1.74 times. With the VACCO divestiture getting finalized in July, we expect to have the balance sheet in great shape as we close out the year. Last, we will discuss updated guidance for the year, which is covered on Chart nine and ten. Chart nine is the words that go with chart 10, so I'll just talk to slide 10 here.

Chris Tucker
SVP & CFO at ESCO

Fundamentally, the guide represents another increase for us. You will remember that last quarter, we still had VACCO in the guidance, and we had included estimates for Maritime as well. Now we need to remove VACCO as that deal has now closed. That reduces sales projections by approximately $125,000,000 and adjusted EPS comes down by approximately $0.50 For the continuing operations, we are increasing the guide for the year. On the sales side, we are coming up by $20,000,000 at both the low end and the high end of the range.

Chris Tucker
SVP & CFO at ESCO

For adjusted earnings per share, we are tightening the range with only one quarter to go. So the bottom of the range is coming up by $0.40 and the high end is coming up by $0.25 This adjusted EPS range represents 21 to 24% growth compared to prior year. The additional sales is delivering nicely to the bottom line. And while we are seeing some tariff impact in the numbers, it is at the low end of our ranges that have been guided previously. So obviously, it is shaping up to be another record year at ESCO, and we are excited to share this updated outlook with you today.

Chris Tucker
SVP & CFO at ESCO

That concludes the financial portion of the call, and now I'll turn it back over to Brian.

Bryan Sayler
President, CEO & Director at ESCO

Well, thanks, Chris. As you heard, the first nine months of our year have gone really well, and we're excited about our ability to increase our full year outlook, and we're excited about the portfolio moves that I discussed earlier. ESCO's future remains bright, and we continue to see a path for value creation and enhancement as we move forward. We just wrapped up our board meetings earlier this week, which gave us a chance to visit our Morgan Schafer operation, which is part of Doble in the USG. This business is located in Montreal and was an ESCO acquisition in 2017 that's focused on condition monitoring of transformers.

Bryan Sayler
President, CEO & Director at ESCO

It was a really great session with our board and an opportunity for us to show them the exciting things going on at ESCO where, you know, we're developing exciting technologies on a regular basis that are being deployed to help customers solve real world problems. We thank the board for their ongoing support, and we're excited about the many things going on across the ESCO set of businesses. With that, I think we're done, and, we could turn it over for the q and a.

Operator

Thank you. At this time, we will conduct the question and answer session. And our first question comes from the line of Tommy Moll of Stephens. Your line is now open.

Tommy Moll
Managing Director at Stephens Inc

Good afternoon, and thanks for taking my questions.

Bryan Sayler
President, CEO & Director at ESCO

Hi, Tommy.

Tommy Moll
Managing Director at Stephens Inc

Brian, I wanted to start on the A and D orders, in particular, for Globe, where you reported some pretty big orders in the quarter. Any update on shipset content? I'm guessing probably nothing changed versus what you've communicated previously. And anything you can tell us just about how that has progressed through the order pipeline? I I know you don't wanna get in the business of guiding future orders, but just give us some sense of where, some of the discussions are for those, Virginia and Columbia class subs.

Bryan Sayler
President, CEO & Director at ESCO

Yeah. I would say no big change, from what we have communicated before, on the, on the Globe side. We we obviously, we we have some additional content for Virginia class and Columbia class that comes through, on the maritime side. I don't think we're quite in a position yet to to communicate that, in detail. And I'll ask for a little bit of patience as we kinda work through our f y, yeah, 26 planning process.

Bryan Sayler
President, CEO & Director at ESCO

So we'll we'll be in a position to communicate that kinda detail, in the future, but I'm I'm not sure we're quite ready for that today.

Tommy Moll
Managing Director at Stephens Inc

Sure. On sticking with A and D and here, I'll I'll ask the question, on an organic basis so we we could think about this ex maritime, ex the backhoe noise. The margin progression, even peering through both of those changes, looks pretty solid here. And so I'm you called out several of the factors. Specifically, though, on price cost.

Tommy Moll
Managing Director at Stephens Inc

I'm just curious for an update there and versus what you would have hoped for for some of the incremental margins flowing through. How did the quarter shape up and how do you feel going forward?

Chris Tucker
SVP & CFO at ESCO

Yeah. Tommy, this is Chris. I would say the margins there in the core company were really phenomenal, really good flow through on kind of the underlying sales growth. I would kind of point out the price first. We're we're seeing some real good, you know, mostly on the aircraft component side, we're seeing some very nice price flow through.

Chris Tucker
SVP & CFO at ESCO

You know, those are efforts that are kind of always ongoing in that business, but sometimes there can be a lag before some of that price flows through just based on working through LTAs and and things like that. So so we're really seeing some good flow through there. So that's certainly kind of the the top driver. I would say on the material side, we're we're frankly in in pretty good shape. You know, generally, the material inflation has probably been a little bit better than what we expected coming into the year.

Chris Tucker
SVP & CFO at ESCO

So so we've got the price good guy, and and we've got less of a material headwind. And so so that's been a pretty good equation for us so far this year. And, you know, then the other things I would point to there, we are we did see some good mix in the quarter. You know, mix can kinda move you around a little bit quarter to quarter. It was favorable this quarter, so that was another kind of boost.

Chris Tucker
SVP & CFO at ESCO

So you won't see that every quarter necessarily, but it came through nicely. And then, again, with a good double digit kind of underlying growth, we we had nice leverage on on the sales as well. So I I would point to all those things as kinda kinda key drivers for us here in the quarter.

Bryan Sayler
President, CEO & Director at ESCO

Yeah. I think we're getting a little bit of traction from some of the early stages of our ESCO operating system implementation as well. That's really coming through in the A and D numbers for sure.

Tommy Moll
Managing Director at Stephens Inc

A little bit might be an understatement, but we'll settle that later and I'll turn it back for now. Thank you.

Operator

Thank you. And our next question comes from the line of John Tanwanteng from CJS. Your line is now open.

Jonathan Tanwanteng
Managing Director at CJS Securities

Hi, guys. Thanks for taking my questions. I was wondering if you could talk about the increase in the outlook, maybe what businesses or product lines that's coming from. It looks like a pretty small increase in revenue, but quite a big increase in the earnings. I was wondering if if you could dig dig a little deeper into that and just tell us where that's all sourcing.

Chris Tucker
SVP & CFO at ESCO

Sure. So I I would say that on the revenue side, you know, we're frankly getting pretty big, increases as we've moved through the year from test. So that business has kind of outperformed. So we're seeing that come through. I would say on the a and d side, we're also getting a little bit of incremental volume, which is helping, obviously.

Chris Tucker
SVP & CFO at ESCO

And then those are kind of offsetting the NRG business in utility where we've seen a little bit of a takedown there as we move through the year just because of some of the kind of uncertainty in the renewables market that you heard Brian talk about earlier. So those are kind of the those are the sales impacts, would say. You're seeing that flow through at a reasonable rate, let's say, 30% or so. We've also got, I I mentioned the tariffs would kinda be at the low end of the range we talked about last quarter. So we said two to four last quarter as a tariff impact.

Chris Tucker
SVP & CFO at ESCO

We're really gonna be more like two, maybe even slightly below two. So a little bit of a pickup there. And then I would also point out that with the VACCO closure, we've got some some pretty big proceeds here in July from that that helped the interest in the fourth quarter. So that's kind of flowing through as well. So all of those things are what are getting you to kind of that lift you see in the press release there.

Jonathan Tanwanteng
Managing Director at CJS Securities

Got it. That's very helpful. And then just for modeling purposes, how should we think about the the impact of VACCO in in '26 as you lap the the sale?

Chris Tucker
SVP & CFO at ESCO

Well, listen. I mean, I I would say that it's you know, if if you you kinda look through what we're gonna file in the numbers now, you'll see kind of, you know, VACCO kinda comes out and goes to discontinued operations. So so you're gonna have kind of the company, there and the a and d results without VACCO in it. And then it just becomes a a a picture of kinda how do you think about the growth, for '26 and beyond. And and and I think there, John, you know, we've kinda talked a lot about kind of the navy dynamics being strong, you know, kind of high single digits, similar for aircraft components.

Chris Tucker
SVP & CFO at ESCO

And then you're gonna have kind of the the kind of partial year to full year impact good for Maritime since we only had five months this year. So so all those things, you know, we think contribute to a pretty nice outlook for '26. We we're not really in a position to kinda give specific guidance around that, but I think where we sit today, honestly, we feel really good about how we're looking going forward.

Jonathan Tanwanteng
Managing Director at CJS Securities

Okay. Understood. Last one for me. Just on the naval side, you obviously are showing strong orders. I was wondering if the pace of deliveries is gonna stay relatively constant or if you're seeing a pickup there either near term or long term as as the navy tries to, you know, increase the throughput of all these things.

Bryan Sayler
President, CEO & Director at ESCO

Well, I think that we we believe that it will increase. I think that it's a little hard to answer the question because, you know, in in our as you model our numbers, you gotta mix both the the globe, you know, all of our existing navy business along with the maritime side. I think the other thing that you're gonna need to start thinking about more is what's happening over in The UK, in addition to what's happening in The US. So I do think the pace is gonna pick up, a little bit. You know, we'll we'll be able to provide a better guide on that when we come together in November for the full '26.

Bryan Sayler
President, CEO & Director at ESCO

But we're listen. We're we're very upbeat about the Navy progression and and what it means for our business.

Jonathan Tanwanteng
Managing Director at CJS Securities

Great. Thank you.

Operator

And we have a follow-up question from Tommy Moll of Stephens. Your line is now open.

Tommy Moll
Managing Director at Stephens Inc

Had a few more I was hoping we could get through today.

Bryan Sayler
President, CEO & Director at ESCO

Sure.

Tommy Moll
Managing Director at Stephens Inc

On the guidance you provided for earnings per share, Chris, I heard you say that interest is probably a good guy for q four just because of the timing of VACCO. Good guy versus what you would have guided to previously. But I'm just putting everything together. It it does look like, the range you provided is 25¢ to 40¢ increase for the year does assume a better 4Q operationally than what you would have communicated previously. I just wanna make sure I'm reading that correctly because there's there's a lot going on this quarter.

Bryan Sayler
President, CEO & Director at ESCO

Yeah. That's correct.

Chris Tucker
SVP & CFO at ESCO

I I would say that the fourth quarter has come up, from what we communicated last time. You know, again, I think, obviously, we're we're we're three months along the road. We had a solid solid third quarter as you see. And so the fourth quarter is absolutely higher than what we had baked in last time.

Tommy Moll
Managing Director at Stephens Inc

Thank you. Also wanted to ask on the USG margins. If it's possible to look just at Doble, can you comment on how the margins progressed year over year there? And if it wasn't what you would hope, maybe what some of the drivers were.

Chris Tucker
SVP & CFO at ESCO

Yeah. Listen, I I would say that, honestly, the the the margins in the first and second quarter were were probably ahead of where we would have anticipated. So so we had, you know, really good kind of flow through and mix in the first six months. And so, you know, that's why we're trying to kinda not overreact to the third quarter. I I would say that, certainly, it was below kinda what we anticipated when the quarter started.

Chris Tucker
SVP & CFO at ESCO

But a lot of that was a little bit of sales miss, and I and I kind of alluded to the timing of some sales, you know, here in the third quarter as we closed out the quarter. You know, we just didn't have some things that we anticipated getting out the door and such. So we had a little bit less sales, and so we lost this the the flow through from that. You know, I think if we gotten that, you you you know, we'd we'd be right kinda where we needed to be. So so I would not say that we're concerned or disappointed with the q three margins.

Chris Tucker
SVP & CFO at ESCO

I mean, I guess, sure, we'd always like a little bit more, but I I think how the business has trended for the first nine months is is honestly quite positive. And, and we feel like the momentum and the factors that Brian talked about that are kinda driving the market there, we we think those are all still, you know, in place. But certainly, as we go quarter to quarter, we're gonna see some ups and downs, you know, and I and I think is so we're a little shaky there, on the utility side, but the the a and d folks, you know, had a had a great quarter from a margin perspective. And what I would say, Tommy, is in our model, you're gonna see some of that. Right?

Chris Tucker
SVP & CFO at ESCO

So next quarter, you know, we might see the a and d a and d margins, you know, not quite so strong, but then the pickup in utility. So we're gonna have those kind of puts and takes a little bit quarter to quarter. But but generally, long term picture still looks very good.

Bryan Sayler
President, CEO & Director at ESCO

Yeah. And I'd point out that the orders for doable were very strong in the quarter. And that, you know, that points to, you know, better things in the the next quarter or two as we move forward.

Tommy Moll
Managing Director at Stephens Inc

Last question, and then I'll turn it back for good today. Brian, in in the news recently, there was reference of a treaty between Britain and the Aussies on nuclear subs. I realize that it may take some time before maritime sees any benefit here, but if there's anything you can do to frame for us on the outside what how impactful that could be, or just any observations you had would be appreciated. Thank you.

Bryan Sayler
President, CEO & Director at ESCO

Yeah. Listen. I I, I think every step in that direction is a is a positive, not just for our business, but probably for, the mutual defense, for, you know, the English speaking world. You know, I I think you're aware that there's a a review going on in the in the defense department right now of the AUKUS program that's kinda limited to what happens in the twenty thirties with with regard to earlier generation Virginia class submarines that are currently slated to be sold. We don't think that there's a lot to that.

Bryan Sayler
President, CEO & Director at ESCO

We think that, you know, the decision on whether The US will will follow through on on those sales, that's a decision that could be made, you know, several years from now. But I think that the thing we believe about that is it just increased our conviction that the investments we've made, in the Royal Navy and the shipbuilding in The UK, that those investments are are gonna pay off. And if anything, you know, you know, our our belief is that they may pay off sooner. Now I'd be clear to say that the the AUKUS program envisions, you know, things that are gonna happen in the eight, ten, twelve years from now. So that's a little bit outside of our planning horizon, but it does bolster the commitment that we would see from from the shipbuilders in The UK to follow through on some of the of the orders and revenue that we anticipate in the, you know, the next three to five years.

Tommy Moll
Managing Director at Stephens Inc

Thank you, Brian. I'll turn it back. Appreciate the time.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back over to Brian for any closing remarks.

Bryan Sayler
President, CEO & Director at ESCO

Well, thanks for, taking some time, to hear from us today. You know, we're excited, that, we've been able to complete these large portfolio moves. And I think we're even more excited that the underlying, performance of the core business has been really, really strong. And, so so we really look forward to the things that are that are in our future, and we look forward to talking to you again next quarter.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Analysts
    • Kate Lowrey
      Director - IR at ESCO
    • Bryan Sayler
      President, CEO & Director at ESCO
    • Chris Tucker
      SVP & CFO at ESCO
    • Tommy Moll
      Managing Director at Stephens Inc
    • Jonathan Tanwanteng
      Managing Director at CJS Securities
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