ESCO Technologies Inc. (NYSE:ESE) Q2 2018 Earnings Conference Call Transcript

May 08, 2018 • 05:00 pm ET


ESCO Technologies Inc. (NYSE:ESE) Q2 2018 Earnings Conference Call Transcript


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Good day, and welcome to the Q2 2018 ESCO Technologies Inc. Earnings Conference Call. Today's call is being recorded.

With us today are Vic Richey, Chairman and CEO; Gary Muenster, Vice President and CFO. And now to present the forward-looking statements, I would like to turn the call over to Kate Lowrey, Director of Investor Relations. Please go ahead.

Kate Lowrey

Thank you. Statements made during this call regarding amounts and timing of 2018 and beyond EPS, adjusted EPS, EBITDA, adjusted EBITDA, EBIT, EBIT margin, growth, tax rates and benefits of the new tax bill, repatriation of foreign cash, profitability, sales, cash flow, orders, success of new products, success in completing additional acquisitions and benefits from recent acquisitions, DOD and commercial customer spending and other statements, 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 8-K to be filed.

We undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, during this call, the Company may discuss some non-GAAP financial measures in describing the Company's operating results. A 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, under the link Investor Relations.

Now, I will turn the call over to Vic.

Victor L. Richey

Thanks, Kate, and good afternoon. As noted in our release and as Gary will describe in more detail, we wrapped-up the first half of the year in solid fashion.

We began the year with Q1 adjusted EPS coming in at the top of our guidance and I'm pleased to report that our Q2 results beat expectations by $0.05. Additionally, our orders and cash flow remained strong. We exceeded our expectations and the balance of the year remains on track.

Now, I will turn it over to Gary for some detailed financial comments.

Gary E. Muenster

Thanks, Vic. As Vic noted, our Q2 and year-to-date results on both GAAP and adjusted basis came in better than expected across several financial metrics. Given the large GAAP EPS impact of the first quarter's one-time gain resulting from the new tax law, I will focus my commentary on adjusted EPS and adjusted EBITDA, as these are more relevant measures of our operating performance when compared to expectations and to prior year.

Before I comment on the Q2 details, I will recap a few data points that we communicated during previous earnings calls. At the start of the year and before anyone could estimate the impact of the then pending tax reform narrative, we