ESCO Reports Second Quarter Fiscal 2025 Results

Source: Nasdaq GlobeNewswire / 07 May 2025 13:15:00 America/Los_Angeles

St. Louis, May 07, 2025 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the second quarter ended March 31, 2025 (Q2 2025).

Operating Highlights

Q2 2025 Sales increased $16.4 million (7 percent) to $265.5 million compared to $249.1 million in Q2 2024.
Q2 2025 Entered Orders were $290.8 million for a book-to-bill ratio of 1.10x, resulting in record backlog of $932 million.
Q2 2025 GAAP EPS increased 33 percent to $1.20 per share compared to $0.90 per share in Q2 2024.
Q2 2025 Adjusted EPS increased 24 percent to $1.35 per share compared to $1.09 per share in Q2 2024.
Net cash provided by operating activities was $58 million YTD, an increase of $39 million compared to the prior year period.

Bryan Sayler, Chief Executive Officer and President, commented, “Q2 was another strong quarter as we delivered 7 percent top line growth, 250 basis points of Adjusted EBITDA margin expansion, and a 24 percent increase in Adjusted EPS compared to the prior year. All three segments delivered solid revenue growth, highlighted by strength across our Navy, commercial aerospace, utility, and Test end-markets. It was very positive to see orders increase 22 percent over the prior year, with particular strength in both USG and Test.

“As previously announced, we closed the SM&P acquisition on April 25^th. Going forward, SM&P will be known as ESCO Maritime Solutions (Maritime). We are happy to welcome the Maritime employees to the ESCO team. Maritime’s signature and power management solutions meaningfully expand our naval product offerings in both the US and UK. We are optimistic about the future of ESCO and are pleased to have Maritime join us as an integral part of that journey.”

Segment Performance

Aerospace & Defense (A&D)

Sales increased $8.7 million (8 percent) to $123.4 million in Q2 2025 from $114.7 million in Q2 2024. The Q2 increase was driven by strength in Navy and aerospace sales.
EBIT increased $6.9 million in Q2 2025 to $30.3 million from $23.4 million in Q2 2024. Adjusted EBIT increased $6.7 million in Q2 2025 to $30.3 million (24.6 percent margin) from $23.6 million (20.6 percent margin) in Q2 2024. Margin improvement was driven by price increases and mix, partially offset by inflationary pressures.
Entered Orders increased $6 million (5 percent) to $122 million in Q2 2025 compared to $116 million in Q2 2024. Q2 2025 included a $6M order for PTI’s cartridge actuated devices/propellant actuated devices (CAD/PAD) products. The segment book-to-bill was 0.99x in the quarter, resulting in ending backlog of $605 million.

Utility Solutions Group (USG)

Sales increased $3.5 million (4 percent) to $90.8 million in Q2 2025 from $87.3 million in Q2 2024. Doble’s sales increased by $3.5 million (5 percent) driven by a strong quarter for offline and protection testing products and services, partially offset by lower cybersecurity/compliance (DUCe) solutions. NRG sales were flat to the prior year due to moderation in renewable energy projects.
EBIT increased $3.2 million in Q2 2025 to $20.8 million from $17.6 million in Q2 2024. Adjusted EBIT increased $3.3 million in Q2 2025 to $20.9 million (23.0 percent margin) from $17.6 million (20.1 percent margin) in Q2 2024. Margin was favorably impacted by leverage on higher volume, price increases and mix, partially offset by inflationary pressures.
Entered Orders increased $13 million (17 percent) to $92 million in Q2 2025. Doble orders increased by $11 million (17 percent) on strong offline test equipment and services orders. NRG orders increased by $2 million (15 percent) driven by solar orders in North America and EMEA. The segment book-to-bill was 1.02x in the quarter, resulting in ending backlog of $124 million.

RF Test & Measurement (Test)

Sales increased $4.3 million (9 percent) to $51.4 million in Q2 2025 from $47.1 million in Q2 2024. Sales growth was primarily driven by higher Test and Measurement, industrial shielding, and medical services in the US, along with a strong quarter for MPE filters projects.
EBIT increased $0.9 million in Q2 2025 to $6.4 million from $5.5 million in Q2 2024. Adjusted EBIT increased $0.7 million in Q2 2025 to $6.4 million (12.4 percent margin) from $5.7 million (12.2 percent margin) in Q2 2024. Margin was favorably impacted by leverage on higher volume, price increases, and cost reduction efforts, partially offset by unfavorable mix and inflationary pressures.
Entered Orders increased $33 million (75 percent) to $77 million in Q2 2025. The increase was primarily driven by a strong quarter for US Test & Measurement, filters, and medical and industrial shielding orders. In addition, orders in China increased $9M in the quarter, primarily related to Test & Measurement projects. The segment book-to-bill was 1.50x in the quarter, resulting in ending backlog of $203 million.

Business Outlook – 2025

Guidance for Q3 2025 and FY 2025 is being shown both with and without the impact of Maritime to provide insight into our expectations for Maritime’s impact on the remainder of Q3 2025 (approximately 2 months) and FY 2025 (approximately 5 months). The transaction costs and purchase accounting amortization associated with the Maritime acquisition have not yet been finalized and are not included in our current business outlook.

Consistent with our initial FY 2025 guidance, organic sales are expected to grow 6 to 8 percent in FY 2025. Maritime is expected to contribute sales in the range of $90 to $100 million in FY 2025.

	Guidance Range ($ Millions)
Sales Guidance excluding Maritime	$	1,090	$	1,110
Maritime Impact	$	90	$	100
Sales Guidance including Maritime	$	1,180	$	1,210

In our Q1 2025 earnings release (dated 2/6/2025), FY 2025 Adjusted EPS guidance was increased to $5.55-$5.75. Due to continued market strength and improvement in operational performance, we are raising our full-year guidance by another $0.10 to $5.65 to $5.85 (18 to 23 percent growth over the prior year). Maritime is expected to contribute Adjusted EPS in the range of $0.20 - $0.30 in FY 2025.

	Guidance Range
Previous FY 2025 Adjusted EPS Guidance	$	5.55	$	5.75
Guidance Increase	$	0.10	$	0.10
Updated FY'25 Adjusted EPS Guidance excluding Maritime	$	5.65	$	5.85
Maritime Impact	$	0.20	$	0.30
Updated FY'25 Adjusted EPS Guidance including Maritime	$	5.85	$	6.15

Management’s expectation is for Q3 Adjusted EPS without Maritime to be in the range of $1.50 to $1.60 (15 to 22 percent growth over the prior year quarter). Maritime is expected to add Adjusted EPS in the range of $0.08 to $0.12 in Q3 2025.

	Guidance Range
Q3 2025 Adjusted EPS Guidance excluding Maritime	$	1.50	$	1.60
Maritime Impact	$	0.08	$	0.12
Q3 2025 Adjusted EPS Guidance including Maritime	$	1.58	$	1.72

Dividend Payment
The next quarterly cash dividend of $0.08 per share will be paid on July 17, 2025 to stockholders of record on July 2, 2025.

Conference Call
The Company will host a conference call today, May 7, at 4:00 p.m. Central Time, to discuss the Company’s Q2 2025 results. A live audio webcast and an accompanying slide presentation will be available in the Investor Center of ESCO’s website. Participants may also access the webcast using this registration link. For those unable to participate, a webcast replay will be available after the call in the Investor Center of ESCO’s website.

Forward-Looking Statements
Statements in this press release regarding Management’s intentions, expectations and guidance for fiscal 2025, including restructuring and cost reduction actions, sales, orders, revenues, margin, earnings, Adjusted EPS, acquisition related amortization, and any other statements which are not strictly historical, are “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. securities laws.

Investors are cautioned that such statements are only predictions and speak only as of the date of this presentation, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future 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 those described in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and the following: the timing and outcome, if any, of the Company’s strategic alternatives review of the VACCO business; the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars, elections, political changes, tariffs and trade disputes, terrorist activities, cyberattacks or natural disasters on the Company’s operations and those of the Company’s customers and suppliers; disruptions in manufacturing or delivery arrangements due to shortages or unavailability of materials or components or supply chain disruptions; inability to access work sites; the timing and content of future contract awards or customer orders; the timely appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties or data breaches; the availability of acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; material changes in the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and taxation; changes in interest, inflation and employment rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration and performance of acquired businesses.

Non-GAAP Financial Measures
The financial measures EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are presented in this press release. The Company defines “EBIT” as earnings before interest and taxes, “EBITDA” as earnings before interest, taxes, depreciation and amortization, “Adjusted EBIT” and “Adjusted EBITDA” as excluding the net impact of the items described in the attached Reconciliation of Non-GAAP Financial Measures, and “Adjusted EPS” as GAAP earnings per share excluding the net impact of the items described and reconciled in the attached Reconciliation of Non-GAAP Financial Measures.

EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes EBIT, Adjusted EBIT, EBITDA, and Adjusted EBITDA are useful in assessing the operational profitability of the Company’s business segments because they exclude interest, taxes, depreciation, and amortization, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The presentation of EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS provides important supplemental information to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

About ESCO
ESCO Technologies is a global provider of highly engineered products and solutions serving diverse end-markets. It manufactures filtration and fluid control products, advanced composites, as well as signature and power management solutions for aviation, Navy, space, and industrial customers. ESCO is an industry leader in designing and manufacturing RF test and measurement products and systems; and provides diagnostic instruments, software and services to industrial power users and the electric utility and renewable energy industries. Headquartered in St. Louis, Missouri, ESCO and its subsidiaries have offices and manufacturing facilities worldwide. For more information on ESCO and its subsidiaries, visit ESCO’s website at www.escotechnologies.com.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)

						Three Months Ended March 31, 2025			Three Months Ended March 31, 2024

Net Sales					$	265,519			249,129
Cost and Expenses:
		Cost of sales				156,298			152,347
		Selling, general and administrative expenses				58,163			55,097
		Amortization of intangible assets				7,989			8,572
		Interest expense				2,195			3,226
		Other expenses (income), net				375			666
			Total costs and expenses			225,020			219,908

Earnings before income taxes						40,499			29,221
Income tax expense						9,466			6,002

			Net earnings		$	31,033			23,219

				Earnings Per Share (EPS)

				Diluted - GAAP	$	1.20			0.90

				Diluted - As Adjusted Basis	$	1.35	(1	)	1.09	(2	)

				Diluted average common shares O/S:		25,877			25,847

(1	)	Q2 2025 Adjusted EPS excludes $0.15 per share of after-tax charges consisting primarily of acquisition related amortization.

(2	)	Q2 2024 Adjusted EPS excludes $0.19 per share of after-tax charges consisting of: $0.02 of MPE acquisition backlog charges, $0.02 of restructuring charges (primarily severance) within the Test and A&D segments, and $0.15 of acquisition related amortization.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)

						Six Months Ended March 31, 2025				Six Months Ended March 31, 2024

Net Sales					$	512,545				467,443
Cost and Expenses:
		Cost of sales				304,940				286,498
		Selling, general and administrative expenses				116,947				109,065
		Amortization of intangible assets				15,982				16,440
		Interest expense				4,452				5,893
		Other expenses (income), net				(216	)			872
			Total costs and expenses			442,105				418,768

Earnings before income taxes						70,440				48,675
Income tax expense						15,934				10,287

			Net earnings		$	54,506				38,388

				Earnings Per Share (EPS)

				Diluted - GAAP	$	2.11				1.49

				Diluted - As Adjusted Basis	$	2.42		(1	)	1.85	(2	)

				Diluted average common shares O/S:		25,854				25,846

(1	)	YTD Q2 2025 Adjusted EPS excludes $0.31 per share of after-tax charges consisting primarily of $0.01 of restructuring charges within the Test segment and $0.30 of acquisition related amortization.

(2	)	YTD Q2 2024 Adjusted EPS excludes $0.36 per share of after-tax charges consisting of: $0.05 of MPE acquisition backlog and inventory step-up charges and acquisition costs, $0.02 of restructuring charges (primarily severance) within the Test and A&D segments, and $0.29 of acquisition related amortization.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)

				GAAP				As Adjusted
				Q2 2025		Q2 2024		Q2 2025		Q2 2024
Net Sales
	Aerospace & Defense		$	123,369		114,701		123,369		114,701
	USG			90,767		87,309		90,767		87,309
	Test			51,383		47,119		51,383		47,119
		Totals	$	265,519		249,129		265,519		249,129

EBIT
	Aerospace & Defense		$	30,296		23,377		30,298		23,640
	USG			20,779		17,575		20,862		17,575
	Test			6,369		5,542		6,369		5,745
	Corporate			(14,750	)	(14,047	)	(9,648	)	(8,260	)
		Consolidated EBIT		42,694		32,447		47,881		38,700
		Less: Interest expense		(2,195	)	(3,226	)	(2,195	)	(3,226	)
		Less: Income tax expense		(9,466	)	(6,002	)	(10,659	)	(7,440	)
		Net earnings	$	31,033		23,219		35,027		28,034

Note 1: Adjusted net earnings of $35.0 million in Q2 2025 exclude $4.0 million (or $0.15 per share) of after-tax charges consisting primarily of acquisition related amortization.

Note 2: Adjusted net earnings of $28.0 million in Q2 2024 exclude $4.8 million (or $0.19 per share) of after-tax charges consisting of: $0.02 of MPE acquisition backlog charges, $0.02 of restructuring charges (primarily severance) within the Test and A&D segments, and $0.15 of acquisition related amortization.

EBITDA Reconciliation to Net earnings:								Q2 2025 -		Q2 2024 -
				Q2 2025		Q2 2024		As Adjusted		As Adjusted
Consolidated EBITDA			$	56,668		46,550		56,895		47,174
Less: Depr & Amort				(13,974	)	(14,103	)	(9,014	)	(8,474	)
Consolidated EBIT				42,694		32,447		47,881		38,700
Less: Interest expense				(2,195	)	(3,226	)	(2,195	)	(3,226	)
Less: Income tax expense				(9,466	)	(6,002	)	(10,659	)	(7,440	)
Net earnings			$	31,033		23,219		35,027		28,034

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)

				GAAP				As Adjusted
				YTD Q2 2025		YTD Q2 2024		YTD Q2 2025		YTD Q2 2024
Net Sales
	Aerospace & Defense		$	237,670		209,434		237,670		209,434
	USG			177,427		170,293		177,427		170,293
	Test			97,448		87,716		97,448		87,716
		Totals	$	512,545		467,443		512,545		467,443

EBIT
	Aerospace & Defense		$	51,892		40,040		51,920		40,303
	USG			41,269		35,200		41,352		35,320
	Test			10,791		7,321		11,256		7,797
	Corporate			(29,060	)	(27,993	)	(18,959	)	(16,860	)
		Consolidated EBIT		74,892		54,568		85,569		66,560
		Less: Interest expense		(4,452	)	(5,893	)	(4,452	)	(5,893	)
		Less: Income tax		(15,934	)	(10,287	)	(18,390	)	(13,045	)
		Net earnings	$	54,506		38,388		62,727		47,622

Note 1: Adjusted net earnings of $62.7 million in YTD 2025 exclude $8.2 million (or $0.31 per share) of after-tax charges consisting of: $0.01 of restructuring charges within the Test segment and acquisition related costs at Corporate, and $0.30 of acquisition related amortization.

Note 2: Adjusted net earnings of $47.6 million in YTD 2024 exclude $9.2 million (or $0.36 per share) of after-tax charges consisting of: $0.05 of MPE acquisition backlog and inventory step-up charges and acquisition costs, $0.02 of restructuring costs (primarily severance) within the Test and A&D segments, and $0.29 of acquisition related amortization.

EBITDA Reconciliation to Net earnings:								YTD		YTD
				YTD		YTD		Q2 2025 -		Q2 2024 -
				Q2 2025		Q2 2024		As Adjusted		As Adjusted
Consolidated EBITDA			$	102,673		82,123		103,393		83,582
Less: Depr & Amort				(27,781	)	(27,555	)	(17,824	)	(17,022	)
Consolidated EBIT				74,892		54,568		85,569		66,560
Less: Interest expense				(4,452	)	(5,893	)	(4,452	)	(5,893	)
Less: Income tax expense				(15,934	)	(10,287	)	(18,390	)	(13,045	)
Net earnings			$	54,506		38,388		62,727		47,622

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

				March 31, 2025	September 30, 2024

Assets
	Cash and cash equivalents		$	57,397	65,963
	Accounts receivable, net			218,123	240,680
	Contract assets			125,281	130,534
	Inventories			231,200	209,164
	Other current assets			28,752	22,308
		Total current assets		660,753	668,649
	Property, plant and equipment, net			172,081	170,596
	Intangible assets, net			394,594	407,602
	Goodwill			536,222	539,899
	Operating lease assets			38,322	37,744
	Other assets			13,690	14,130
			$	1,815,662	1,838,620

Liabilities and Shareholders' Equity
	Current maturities of long-term debt		$	20,000	20,000
	Accounts payable			81,244	98,371
	Contract liabilities			128,114	124,845
	Other current liabilities			92,661	106,638
		Total current liabilities		322,019	349,854
	Deferred tax liabilities			72,580	75,333
	Non-current operating lease liabilities			35,948	34,810
	Other liabilities			39,787	39,273
	Long-term debt			68,000	102,000
	Shareholders' equity			1,277,328	1,237,350
			$	1,815,662	1,838,620

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)

		Six Months Ended March 31, 2025		Six Months Ended March 31, 2024
Cash flows from operating activities:
Net earnings	$	54,506		38,388
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		27,781		27,555
Stock compensation expense		5,323		4,144
Changes in assets and liabilities		(27,207	)	(47,869	)
Effect of deferred taxes		(2,128	)	(2,981	)
Net cash provided by operating activities		58,275		19,237

Cash flows from investing activities:
Acquisition of business, net of cash acquired				(56,179	)
Capital expenditures		(15,350	)	(16,301	)
Additions to capitalized software		(5,465	)	(5,912	)
Net cash used by investing activities		(20,815	)	(78,392	)

Cash flows from financing activities:
Proceeds from long-term debt		66,000		154,000
Principal payments on long-term debt and short-term borrowings		(100,000	)	(65,000	)
Dividends paid		(4,130	)	(4,125	)
Purchases of common stock into treasury				(7,189	)
Other		(6,146	)	(1,432	)
Net cash (used) provided by financing activities		(44,276	)	76,254

Effect of exchange rate changes on cash and cash equivalents		(1,750	)	471

Net (decrease) increase in cash and cash equivalents		(8,566	)	17,570
Cash and cash equivalents, beginning of period		65,963		41,866
Cash and cash equivalents, end of period	$	57,397		59,436

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data (Unaudited)
(Dollars in thousands)

Backlog And Entered Orders - Q2 2025			A&D		USG		Test		Total
	Beginning Backlog - 1/1/25	$	606,687		122,857		177,404		906,948
	Entered Orders		121,706		92,184		76,950		290,840
	Sales		(123,369	)	(90,767	)	(51,383	)	(265,519	)
	Ending Backlog - 3/31/25	$	605,024		124,274		202,971		932,269

Backlog And Entered Orders - YTD Q2 2025			A&D		USG		Test		Total
	Beginning Backlog - 10/1/24	$	600,382		119,943		158,644		878,969
	Entered Orders		242,312		181,758		141,775		565,845
	Sales		(237,670	)	(177,427	)	(97,448	)	(512,545	)
	Ending Backlog - 3/31/25	$	605,024		124,274		202,971		932,269

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)

EPS – Adjusted Basis Reconciliation – Q2 2025
	EPS – GAAP Basis – Q2 2025	$	1.20
	Adjustments (defined below)		0.15
	EPS – As Adjusted Basis – Q2 2025	$	1.35

	Adjustments exclude $0.15 per share consisting primarily of acquisition
	related amortization.
	The $0.15 of EPS adjustments per share consists of $5.2 million of pre-tax
	charges offset by $1.2 million of tax benefit for net impact of $4 million.

EPS – Adjusted Basis Reconciliation – Q2 2024
	EPS – GAAP Basis – Q2 2024	$	0.90
	Adjustments (defined below)		0.19
	EPS – As Adjusted Basis – Q2 2024	$	1.09

	Adjustments exclude $0.19 per share consisting primarily of $0.02 of MPE
	acquisition backlog charges, $0.02 of restructuring charges within the Test
	and A&D segments, and $0.15 of acquisition related amortization.
	The $0.19 of EPS adjustments per share consists of $6.2 million of pre-tax charges
	offset by $1.4 million of tax benefit for net impact of $4.8 million.

EPS – Adjusted Basis Reconciliation – YTD Q2 2025
	EPS – GAAP Basis – YTD Q2 2025	$	2.11
	Adjustments (defined below)		0.31
	EPS – As Adjusted Basis – YTD Q2 2025	$	2.42

	Adjustments exclude $0.31 per share consisting primarily of $0.01 of restructuring
	charges within the Test segment and $0.30 of acquisition related amortization.
	The $0.31 of EPS adjustments per share consists of $10.7 million of pre-tax charges
	offset by $2.5 million of tax benefit for net impact of $8.2 million.

EPS – Adjusted Basis Reconciliation – YTD Q2 2024
	EPS – GAAP Basis – YTD Q2 2024	$	1.49
	Adjustments (defined below)		0.36
	EPS – As Adjusted Basis – YTD Q2 2024	$	1.85

	Adjustments exclude $0.36 per share consisting primarily of $0.05 of MPE acquisition
	backlog charges, inventory step-up charges and acquisition costs, $0.02 of
	restructuring charges, and $0.29 of acquisition related amortization.
	The $0.36 of EPS adjustments per share consists of $12 million of pre-tax charges
	offset by $2.8 million of tax benefit for net impact of $9.2 million.

SOURCE ESCO Technologies Inc.
Kate Lowrey, Vice President of Investor Relations, (314) 213-7277

ESCO Reports Second Quarter Fiscal 2025 Results

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