ESCO Technologies (NYSE:ESE) Q1 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsBryan Sayler - President and CEOChris Tucker - SVP and CFOKate Lowrey - VP of Investor RelationsConference Call ParticipantsJon Tanwanteng - Managing Director and Senior Equity Research AnalystTommy Moll - Managing Director and Senior Equity Research AnalystOperatorday, and thank you for standing by. Welcome to the first quarter 2026 ESCO Technologies earnings call. At this time, all participants are in a li ...

ESCO Technologies (NYSE:ESE) Q1 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsBryan Sayler - President and CEOChris Tucker - SVP and CFOKate Lowrey - VP of Investor RelationsConference Call ParticipantsJon Tanwanteng - Managing Director and Senior Equity Research AnalystTommy Moll - Managing Director and Senior Equity Research AnalystOperatorDay, 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. ...

Financial Data and Key Metrics Changes - The company booked over $550 million in orders in Q1 2026, a 143% increase year-over-year [4] - Top line sales growth was 35%, with adjusted earnings per share increasing by 73% to a record $1.64 per share [5][12] - Adjusted EBIT margin expanded by 380 basis points to 19.4% [12] Business Segment Data and Key Metrics Changes - Aerospace and Defense segment saw orders over $380 million, compared to $75 million in the prior year, with sales up 76% [6][12] - Utility Solutions Group orders increased by 10%, driven by strong performance at Doble, while sales were up modestly by 1% [14] - Test business had orders up over 17% and sales up nearly 27%, with adjusted EBIT margins improving to 13.8% [15] Market Data and Key Metrics Changes - The company experienced strong order strength from both U.S. and U.K. Navy programs, indicating robust demand in the defense sector [5][6] - The renewables market is currently recalibrating, affecting near-term investments but expected to play a vital role in the long term [8][41] Company Strategy and Development Direction - The company is raising its full-year sales and earnings guidance due to strong Q1 results and record backlog [10][18] - Focus remains on strategic acquisitions in utility, aircraft components, and Navy segments, with a healthy M&A pipeline being rebuilt [50] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term demand across markets, particularly in Navy and aerospace sectors, despite short-term fluctuations [25][26] - The company anticipates a tapering of growth after a strong Q1, with expectations for solid growth throughout the year [34] Other Important Information - Operating cash flow more than doubled to $68.9 million, driven by increased contract liability in the Navy business [16] - Full-year adjusted earnings per share guidance increased to a range of $7.90-$8.15, reflecting a growth of 31%-35% compared to 2025 [19] Q&A Session Summary Question: Updates on A&D orders and ship set content - Management noted long-term demand is strong, but specifics on platforms cannot be disclosed due to MOD policies [25][26] Question: Revenue guidance appears conservative - Management indicated that Q1 is expected to be the strongest growth quarter, with tapering growth anticipated later in the year [34] Question: Strength in the test business - The recovery in traditional core markets, particularly electromagnetic compatibility and medical shielding, has driven recent strength [38] Question: Outlook for the energy business - Current focus is on completing existing projects to qualify for tax credits, with expectations for a return to normal growth in late 2026 [41] Question: Maritime business large orders impact - Management expects some revenue from maritime contracts starting in Q4, with more significant impacts in 2027 and 2028 [43] Question: Capital allocation and M&A opportunities - The company is actively rebuilding its M&A pipeline, focusing on strategic acquisitions in its core segments [50] Question: Military business strength outside Navy - Management highlighted broad-based strength in military aircraft, including significant orders for F-15EX fighters and sixth-generation platforms [54]

Bryan Sayler President & CEO Chris Tucker Sr. Vice President & CFO February 5, 2026 1 Forward Looking Statement ESCO Technologies First Quarter FY 2026 Earnings Call Statements in this presentation regarding Management's intentions, expectations and guidance for fiscal 2026, 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" ...

Financial Performance - Q1 2026 sales increased by $75 million (35.0%) to $290 million compared to $215 million in Q1 2025[4] - Q1 2026 GAAP EPS from continuing operations increased by 40.5% to $1.11 per share compared to $0.79 per share in Q1 2025[4] - Q1 2026 adjusted EPS from continuing operations increased by 72.6% to $1.64 per share compared to $0.95 per share in Q1 2025[4] - Total net sales for Q1 2026 reached $289.7 million, a 35% increase from $214.6 million in Q1 2025[21] - Adjusted net earnings for Q1 2026 were $42.4 million, compared to $24.5 million in Q1 2025, reflecting a 73% year-over-year growth[21][22] - Consolidated EBITDA for Q1 2026 was $64.9 million, up from $41.0 million in Q1 2025, representing a 58% increase[23] - The company reported a consolidated EBIT of $38.4 million for Q1 2026, compared to $28.1 million in Q1 2025, marking a 37% increase[23] Orders and Backlog - Q1 2026 entered orders increased by $328 million (143.0%) to $557 million, resulting in a record backlog of $1.4 billion[4] - Organic orders increased by 39% across all three business segments, reflecting favorable end-market conditions[3] - The ending backlog as of December 31, 2025, was $1.4 billion, an increase from $1.1 billion at the beginning of the quarter[29] Segment Performance - Aerospace & Defense segment sales increased by $62 million (75.7%) to $144 million, driven by strong performance in Navy and aerospace[7] - Utility Solutions Group sales increased by $1 million (1.0%) to $87 million, with Doble sales increasing by $4 million (5.8%) and NRG sales decreasing by $3 million (22.4%) compared to Q1 2025[7] - Test & Measurement segment sales increased by $12 million (26.7%) to $58 million, primarily driven by higher U.S. and European demand[10] Guidance - FY 2026 revenue guidance increased by $20 million, now expected to be in the range of $1.29 to $1.33 billion, reflecting 18% to 21% growth over the prior year[10] - Full year adjusted EPS guidance raised to a range of $7.90 - $8.15 per share, reflecting a 31% to 35% growth[10] Cash and Debt - Cash and cash equivalents at the end of Q1 2026 were $103.8 million, up from $101.4 million at the end of Q4 2025[27] - The total current assets as of December 31, 2025, were $689.7 million, slightly up from $688.5 million as of September 30, 2025[25] - The company’s long-term debt decreased to $125.0 million from $166.0 million in the previous quarter[25] - The company incurred $2.9 million in interest expenses for Q1 2026, compared to $2.3 million in Q1 2025[23]

- Q1 Sales increase 35% to $290 Million - Q1 Entered Orders increase 143% to $557 Million - Q1 GAAP EPS from Continuing Operations increases 41% to $1.11 - Q1 Adjusted EPS from Continuing Operations increases 73% to $1.64 -St. Louis, Feb. 05, 2026 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the first quarter ended December 31, 2025 (Q1 2026). Operating Highlights Q1 2026 Sales increased $75 million (35.0 percent) to $290 million com ...

St. Louis, Jan. 14, 2026 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE:ESE) will report its first quarter financial results after the market close on Thursday, February 5, 2026, followed by a conference call where the financial results and related commentary will be discussed. Event: First Quarter 2026 Conference Call Date: Thursday, February 5Time: 4:00 p.m. Central Time The conference call webcast and an accompanying slide presentation will be available in the Investor Center of ESCO’s website. The sl ...

Revenue Segments - The A&D segment accounted for approximately 44% of total revenue from continuing operations in 2025, up from 34% in 2023[21] - The USG segment represented about 35% of total revenue from continuing operations in 2025, down from 40% in 2024 and 2023[24] - The Test segment contributed approximately 21% of total revenue from continuing operations in 2025, a decrease from 26% in 2023[27] - Direct and indirect sales to the U.S. Government accounted for approximately 23% of total revenue from continuing operations in 2025, up from 17% in 2023[32] - The company’s international sales accounted for approximately 34% of total revenue from continuing operations in 2025[31] - Approximately 23% of the company's revenues from continuing operations in 2025 were generated from sales to the U.S. Government or its contractors, primarily within the A&D segment[66] Backlog and Orders - Total Company backlog of firm orders at September 30, 2025, was $1,133.6 million, an increase of 70.7% from $664.2 million at September 30, 2024[40] - The company's twelve-month backlog as of September 30, 2025, was approximately $722 million, representing confirmed orders expected to be recognized as revenue within the next twelve months[68] - Entered orders for 2025 totaled $1,564.8 million, resulting in a book-to-bill ratio of 1.43x, with backlog increasing by 70.7% to $1,133.6 million[132][135] Acquisitions and Investments - In April 2025, the company acquired the Signature Management & Power business, enhancing its capabilities in naval defense solutions[19] - The company acquired MPE Limited in November 2023, a manufacturer of high-performance products for critical infrastructure applications[19] - The company completed the acquisition of ESCO Maritime Solutions for approximately $472 million on April 25, 2025, contributing to revenue growth[132] - The company completed the sale of its former A&D subsidiary VACCO Industries for net sales proceeds of approximately $270 million in July 2025, reflecting a strategic portfolio analysis aimed at high-growth markets[152] Financial Performance - Sales for 2025 were $1,095.4 million, a 19.2% increase from $919.1 million in 2024, with net earnings from continuing operations rising to $116.3 million from $102.6 million[127] - Diluted EPS – GAAP from continuing operations increased by 13.1% to $4.49 in 2025, compared to $3.97 in 2024[127] - EBIT from continuing operations increased to $170.4 million in 2025, a 16.6% rise from $146.2 million in 2024, with significant contributions from all segments[141] - Net cash provided by operating activities from continuing operations increased to $200.4 million in 2025 from $121.6 million in 2024, driven by higher net earnings and lower working capital requirements[156] Operational Efficiency - The company is focused on reducing operating costs and enhancing product branding through the ESCO Operating System initiative, which began in 2025[19] - Selling, general and administrative expenses were $234.6 million, or 21.4% of net sales, compared to 22.7% in 2024, reflecting improved efficiency[137] - The company incurred capital expenditures of $36.3 million in 2025, up from $28.3 million in 2024, with increases across all three business segments[157] Workforce and Culture - As of September 30, 2025, the company employed 3,425 individuals, with 3,359 being full-time employees, and 28% located in 16 offices outside the USA[48] - The average tenure of the company's workforce was 9 years, with one-third of employees having been with the company for 10 or more years[55] - The company conducted a global engagement survey with a response rate of 74%, showing an overall global engagement increase to 83%[52] - The company has launched the Leadership Education and Development Program (LEAD) to foster professional growth, with an inaugural cohort of ten participants starting in April 2025[54] Compliance and Risks - The company faces significant compliance costs and reputational risks due to complex U.S. and foreign government regulations affecting international sales[76] - Environmental laws and regulations could increase compliance costs and adversely affect profitability, with potential fines for non-compliance[90] - Cybersecurity threats pose risks to the company's information technology systems, potentially affecting business operations and incurring significant costs[80] - The company is exposed to product liability risks, which could result in costly fixes and litigation if defects are found in products[87] Financial Controls and Governance - The company maintained effective internal control over financial reporting as of September 30, 2025, based on criteria established in the Internal Control – Integrated Framework[183] - The internal control over financial reporting has been audited by Grant Thornton, an independent registered public accounting firm, as of September 30, 2025[185] - The Company has adopted an Insider Trading Policy to prevent trading in Company securities while in possession of material non-public information[191] Stock and Shareholder Information - As of November 14, 2025, there were approximately 1,894 holders of record of the company's common stock[110] - The company's common stock is listed on the New York Stock Exchange under the trading symbol "ESE"[110] - The company did not repurchase any shares during the fourth quarter of 2025[111] - The cumulative total shareholder return for the company was $266.11 as of September 30, 2025, compared to $100 at the start of the measurement period on September 30, 2020[117]

Core Insights - ESCO Technologies Inc. (ESE) is a significant player in the technology sector, focusing on innovative solutions across various segments such as filtration, RF shielding, and utility solutions [1] - The company is actively competing with other technology firms and aims to maintain its market position through strategic initiatives and financial prudence [1] Insider Transactions - On November 26, 2025, CEO and President Sayler Bryan H sold 401 shares of ESE at $220 each, leaving him with 20,254 shares, which may indicate his perspective on the company's future performance or personal financial planning [2][6] Q4 2025 Earnings Call - The Q4 2025 earnings call on November 20, 2025, included key executives like Bryan Sayler and Christopher Tucker, with analysts from Stephens Inc. and CJS Securities, Inc. attending, reflecting market interest in ESE's financial health and strategic direction [3][6] Financial Metrics - ESE's financial metrics indicate a favorable market valuation with a P/E ratio of 18.92, a price-to-sales ratio of 4.85, and an enterprise value to sales ratio of 4.95, showcasing investor confidence in the company's revenue generation [4][6] - The company maintains a low debt-to-equity ratio of 0.13, indicating a conservative approach to debt, and a current ratio of 1.35, demonstrating its ability to meet short-term obligations [5][6] - An earnings yield of 5.29% provides insight into potential returns for investors [5][6]

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