ESCO Technologies Inc. (NYSE:ESE) Q4 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 05:00 pm ET

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ESCO Technologies Inc. (NYSE:ESE) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Inscriptions] Our first question comes from the line of Jon Tanwanteng with CJS Securities. Your line is now open.

Analyst
Jon Tanwanteng

Good afternoon, guys. Thanks for taking my questions.

Executive
Vic Richey

Hey Jon.

Executive
Gary E. Muenster

Hey Jon.

Analyst
Jon Tanwanteng

Gary, can you give us the adjusted EBITDA number and margins that you're working off or basing the 12% to 13% and EBITDA margin expansion growth off of for next year?

Executive
Gary E. Muenster

Yeah. When we look at where we're looking to go, if we pro forma '19, is that what you're referring to?

Analyst
Jon Tanwanteng

Yeah.

Executive
Gary E. Muenster

I would say it's about $139 million for '19 and then we're seeing in the 12% to 13% growth off of that number -- in that $139 is what correlates to the $2.95, our pro forma EPS -- adjusted pro forma EPS for '19.

Analyst
Jon Tanwanteng

Okay, great. Thank you. And then can you give us a bit more color in terms of the timing of your backlog and the dip you forecast in Q1 into Q2?

Executive
Gary E. Muenster

Yeah, Let me do it from the bottom, and I'll refer to Vic, if he wants to talk about the business side of it. So one thing I want to make sure everyone is aware, is kind of what the profile of the year looks like, how we tend to have significantly back half-weighted years, it seems like every other year, this year; in fiscal '20, it looks a little bit more like fiscal '18 and so just to give you a couple of statistics to save you the math. In fiscal '18, in the first half of the year, we did about 29% of our annual EPS, which means 71% came in the second half. Fiscal '20 -- I'm sorry, fiscal '19 was a little flatter, we did 40% in the first half and 60% in the second half.

And fiscal '20's cadence will look a little bit more like '18, where we'll have somewhere between 30% and 33% of our EPS, adjusted EPS will hit in the first half, which means 67% will hit in the second half. So while the quarterly profile is back-end weighted again, it looks pretty similar to the achievements that we realized in fiscal '18 on that kind of weighting. And that's really just a function of the bigger programs we have across the test business, across the submarine platforms.

Doble has some things in the back half of the year on some larger projects that it impact that across the Aerospace business. It's usually a function of distributor restocking orders that come in, in fits and starts. So there's nothing really unique to this year, again, because we've done this profile in the past, and it's very achievable for us. So, hopefully that answered your question from a financial perspective. And Vic...

Executive
Vic Richey

Yes, let me just add. I mean, I think the thing that gives me a lot of confidence is the backlog. We have -- grew the backlog pretty significantly over this past year. So it's -- these timing issues quarter to