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[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents ESCO Technologies Inc.'s unaudited condensed consolidated financial statements for the third quarter and first nine months ended June 30, 2025, along with detailed notes on significant accounting policies, acquisitions, and segment performance [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter ended June 30, 2025, net sales increased to $296.3 million from $233.6 million year-over-year, but net earnings decreased to $26.1 million from $29.2 million; for the nine months ended June 30, 2025, net sales grew to $742.7 million from $645.6 million, and net earnings increased to $80.6 million from $67.6 million compared to the prior year period Q3 Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $296,344 | $233,568 | +26.8% | | Earnings from Continuing Operations | $24,755 | $28,312 | -12.6% | | **Net Earnings** | $26,065 | $29,230 | -10.8% | | **Diluted EPS (Net Earnings)** | $1.01 | $1.13 | -10.6% | Nine Months Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Nine Months 2025 | Nine Months 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $742,714 | $645,621 | +15.0% | | Earnings from Continuing Operations | $71,445 | $63,330 | +12.8% | | **Net Earnings** | $80,571 | $67,618 | +19.2% | | **Diluted EPS (Net Earnings)** | $3.11 | $2.62 | +18.7% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased significantly to $2.53 billion from $1.84 billion at September 30, 2024, primarily driven by increases in Goodwill and Intangible assets from a recent acquisition; total liabilities also rose to $1.20 billion from $601.3 million, largely due to a substantial increase in long-term debt to fund the acquisition, while total shareholders' equity grew to $1.33 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $754,723 | $668,649 | | **Goodwill** | $760,555 | $529,935 | | **Intangible Assets, net** | $745,079 | $403,524 | | **Total Assets** | **$2,526,385** | **$1,838,620** | | **Total Current Liabilities** | $496,840 | $349,854 | | **Long-term Debt** | $505,000 | $102,000 | | **Total Liabilities** | **$1,199,771** | **$601,270** | | **Total Shareholders' Equity** | $1,326,614 | $1,237,350 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2025, net cash provided by operating activities was $132.0 million, a significant increase from $55.5 million in the prior year period; net cash used in investing activities was $510.2 million, primarily for the acquisition of a business ($472.0 million), and net cash provided by financing activities was $390.6 million, driven by proceeds from long-term debt to fund the acquisition Cash Flow Summary (Nine Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $132,002 | $55,454 | | **Net Cash used by Investing Activities** | ($510,200) | ($89,888) | | *Acquisition of business, net* | *($472,006)* | *($56,383)* | | **Net Cash from Financing Activities** | $390,599 | $55,301 | | *Proceeds from long-term debt* | *$645,000* | *$193,000* | | **Net Increase in Cash** | $12,853 | $21,176 | | **Cash at End of Period** | $78,816 | $63,042 | [Note 3. Acquisition](index=7&type=section&id=Note%203.%20ACQUISITION) On April 25, 2025, the company acquired the Signature Management & Power (SM&P) business from Ultra Maritime for approximately $472 million, now known as ESCO Maritime Solutions and part of the A&D segment, which added $37.1 million in revenue since the closing date and is expected to enhance the company's naval product offerings, with the preliminary purchase price allocation resulting in $222.7 million of goodwill - Completed the acquisition of Signature Management & Power (SM&P) for **~$472 million**, which will be integrated into the Aerospace & Defense (A&D) segment[17](index=17&type=chunk) - The acquired business, now ESCO Maritime Solutions, contributed **$37.1 million** in revenue in the quarter since the acquisition date[17](index=17&type=chunk) - The preliminary purchase price allocation includes **$290.5 million** for customer relationships, **$61.3 million** for backlog, and **$222.7 million** in goodwill[18](index=18&type=chunk) [Note 4. Assets Held for Sale / Discontinued Operations](index=9&type=section&id=Note%204.%20ASSETS%20HELD%20FOR%20SALE%20%2F%20DISCONTINUED%20OPERATIONS) The company entered into a definitive agreement to sell its VACCO Industries (VACCO) business to RBC Bearings Incorporated, with the divestiture completed on July 18, 2025, for net proceeds of approximately $275 million, representing a strategic exit from the Space business, with VACCO's results now reported as discontinued operations - Agreed to sell VACCO Industries to RBC Bearings, completing the transaction on July 18, 2025, for net proceeds of approximately **$275 million**[19](index=19&type=chunk) - The sale of VACCO represents a strategic shift to exit the Space business; its financial results are now classified as discontinued operations[19](index=19&type=chunk) VACCO Net Sales (Discontinued Operations, in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | **Three Months** | $30.3 | $27.2 | | **Nine Months** | $96.4 | $82.6 | [Note 8. Business Segment Information](index=11&type=section&id=Note%208.%20BUSINESS%20SEGMENT%20INFORMATION) The company operates in three segments: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test); for the nine months ended June 30, 2025, A&D was the largest segment by sales ($307.8M) and EBIT ($78.2M), followed by USG (Sales $269.8M, EBIT $62.8M) and Test (Sales $165.1M, EBIT $21.5M) Segment Net Sales (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Aerospace & Defense** | $136,324 | $87,235 | $307,819 | $241,279 | | **USG** | $92,357 | $90,277 | $269,784 | $260,570 | | **Test** | $67,663 | $56,056 | $165,111 | $143,772 | | **Consolidated** | **$296,344** | **$233,568** | **$742,714** | **$645,621** | Segment EBIT (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Aerospace & Defense** | $36,577 | $20,150 | $78,246 | $55,919 | | **USG** | $21,540 | $22,155 | $62,808 | $57,355 | | **Test** | $10,732 | $9,292 | $21,523 | $16,613 | | **Corporate (loss)** | ($27,859) | ($12,296) | ($56,918) | ($40,289) | | **Consolidated EBIT** | **$40,990** | **$39,301** | **$105,659** | **$89,598** | [Note 13. Revenues](index=16&type=section&id=Note%2013.%20REVENUES) For the nine months ended June 30, 2025, total revenue was $742.7 million, with commercial customers accounting for $538.2 million and government customers for $204.5 million, and geographically, the United States contributed $496.7 million; the company's remaining performance obligations (backlog) stood at $1.165 billion, with approximately 66% expected to be recognized as revenue in the next twelve months Revenue Disaggregation (Nine Months Ended June 30, 2025, in thousands) | Category | A&D | USG | Test | Total | | :--- | :--- | :--- | :--- | :--- | | **By Customer Type** | | | | | | Commercial | $151,756 | $261,581 | $124,831 | $538,168 | | Government | $156,063 | $8,203 | $40,280 | $204,546 | | **By Geographic Location** | | | | | | United States | $226,444 | $173,121 | $97,086 | $496,651 | | International | $81,375 | $96,663 | $68,025 | $246,063 | - Remaining performance obligations (backlog) totaled **$1,165.4 million** as of June 30, 2025[56](index=56&type=chunk) - The company expects to recognize approximately **66%** of its backlog as revenue within the next twelve months[56](index=56&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the financial results, highlighting a 26.8% increase in Q3 net sales, driven primarily by the A&D segment and the Maritime acquisition; despite higher sales, Q3 net earnings from continuing operations declined due to increased costs associated with the acquisition, and the company's backlog significantly increased to $1.165 billion, with the discussion also covering segment-level performance, liquidity, and the strategic impacts of the recent acquisition and divestiture [Net Sales Analysis](index=21&type=section&id=Net%20Sales%20Analysis) Q3 2025 net sales rose 26.8% YoY to $296.3 million, and nine-month sales grew 15.0% to $742.7 million; the A&D segment was the primary driver, with Q3 sales up 56.3% ($49.1 million), including $37.1 million from the new Maritime business, while the Test segment grew 20.7%, and the USG segment grew 2.3% in the quarter - Q3 2025 net sales increased by **26.8%** year-over-year, driven by a **$49.0 million** increase in the A&D segment, an **$11.6 million** increase in Test, and a **$2.1 million** increase in USG[70](index=70&type=chunk) - A&D segment's Q3 sales growth of **56.3%** was mainly due to the Maritime acquisition (contributing **$37.1 million**) and increased commercial and defense aerospace shipments[71](index=71&type=chunk) [Orders and Backlog](index=23&type=section&id=Orders%20and%20Backlog) The company's backlog from continuing operations surged to $1.165 billion at June 30, 2025, up from $664 million at September 30, 2024; new orders in Q3 2025 were $749.1 million, a substantial increase from $254.9 million in Q3 2024, with this growth dominated by the A&D segment, which received $582.4 million in new orders, including $364.2 million of acquired backlog from the Maritime acquisition - Backlog from continuing operations increased to **$1,165 million** at June 30, 2025, from **$664 million** at September 30, 2024[74](index=74&type=chunk) - Q3 2025 new orders totaled **$749.1 million**, with the A&D segment contributing **$582.4 million**, which includes **$364.2 million** of backlog acquired with the Maritime business[74](index=74&type=chunk) [EBIT Analysis](index=23&type=section&id=EBIT%20Analysis) Consolidated EBIT from continuing operations was $41.0 million (13.8% of sales) in Q3 2025, compared to $39.3 million (16.8% of sales) in Q3 2024; the A&D segment's EBIT grew significantly due to higher sales volume from the Maritime acquisition, despite being negatively impacted by $2.7 million in acquisition-related charges, while corporate costs increased substantially, mainly due to amortization and transaction costs from the acquisition Consolidated EBIT from Continuing Operations (in thousands) | Period | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **EBIT** | $40,990 | $39,301 | $105,659 | $89,598 | | **EBIT Margin** | 13.8% | 16.8% | 14.2% | 13.9% | - A&D segment EBIT increased in Q3 and the first nine months of 2025, driven by higher sales volumes including the Maritime acquisition, though Q3 was negatively impacted by **$2.7 million** in inventory step-up and stamp duty charges[82](index=82&type=chunk) - Corporate costs increased in Q3 2025 to **$27.9 million** from **$12.3 million** YoY, primarily due to an **$8.4 million** increase in acquisition-related amortization and **$5.2 million** in acquisition costs from the Maritime deal[85](index=85&type=chunk) [Capital Resources and Liquidity](index=26&type=section&id=Capital%20Resources%20and%20Liquidity) The company's financial position remains strong, with $338 million available under its credit facility and $78.7 million in cash as of June 30, 2025; net cash from continuing operations increased to $88.3 million for the first nine months of 2025, and the company completed the $472 million acquisition of SM&P (Maritime) and the $275 million divestiture of VACCO, strategically reshaping its portfolio, while regular quarterly dividends of $0.08 per share were maintained - Working capital from continuing operations decreased to **$255.8 million** at June 30, 2025, from **$283.9 million** at September 30, 2024, mainly due to a **$124.7 million** increase in contract liabilities from the Maritime acquisition[88](index=88&type=chunk) - As of June 30, 2025, the company had approximately **$338 million** available to borrow under its credit facility, plus a **$250 million** increase option, and **$78.7 million** cash on hand[91](index=91&type=chunk) - Key strategic activities included the acquisition of SM&P (Maritime) for **~$472 million** and the divestiture of VACCO for **~$275 million**[92](index=92&type=chunk)[93](index=93&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks stem from changes in interest rates and foreign currency exchange rates, which ESCO selectively manages using derivative financial instruments such as forward contracts and swaps, with no material changes to the company's market risks reported since the fiscal year ended September 30, 2024 - Primary market risks are related to interest rate changes and foreign currency exchange rate fluctuations[99](index=99&type=chunk) - The company uses derivative instruments like forward contracts and swaps to manage these risks; no material changes in market risk exposure were reported since September 30, 2024[99](index=99&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with the assessment of internal control over financial reporting excluding the recently acquired Signature Management & Power (Maritime) business, as the integration is still in process, which is permissible under SEC guidance - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[100](index=100&type=chunk) - The assessment of internal controls over financial reporting excludes the newly acquired Maritime business, which is currently being integrated[100](index=100&type=chunk) [PART II - OTHER INFORMATION](index=30&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reported that it did not repurchase any of its shares during the third quarter of fiscal year 2025 - No shares were repurchased by the company during the third quarter of 2025[102](index=102&type=chunk) [Item 6. Exhibits](index=31&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, CEO and CFO certifications, and XBRL interactive data files - Exhibits filed include certifications from the CEO (31.1) and CFO (31.2), as well as XBRL data files (101 series)[105](index=105&type=chunk)

Financial Data and Key Metrics Changes - ESCO Technologies reported a strong quarter with nearly 27% sales growth on a reported basis and 11% organic growth, excluding the Maritime acquisition [17] - Adjusted EBIT margins increased from 19.3% last year to 21.1% in this year's third quarter, while adjusted earnings per share rose by 25% to $1.6 per share [17][18] - The company ended Q3 with a record backlog of nearly $1,200 million, reflecting a significant increase in orders [16] Business Line Data and Key Metrics Changes - Aerospace and Defense segment saw revenue up almost 20% in the quarter and 15% year-to-date, with a reported growth of 56% and 14% organically, driven by significant orders for Virginia and Columbia class submarines [10][19] - The Utility Solutions Group experienced flat sales growth but strong order momentum, with a 5.5% increase in orders during the quarter [20][21] - The Test business achieved a 21% revenue growth over the prior year, with year-to-date revenue up by 15% [12][23] Market Data and Key Metrics Changes - The macroeconomic environment remains complicated due to evolving trade policies and geopolitical uncertainties, but the company has managed to mitigate impacts and deliver strong operating results [8] - The US renewables market is recalibrating post-legislation, but long-term demand drivers for electricity remain intact, including data centers and electrification of transportation [11][12] Company Strategy and Development Direction - The completion of the Maritime acquisition and VACCO divestiture marks a significant step in executing the company's portfolio strategy, focusing on the navy and aircraft markets [5][6] - The company is optimistic about long-term growth in the aerospace and navy markets, expecting increased production rates to drive future growth [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage potential future risks associated with tariffs and highlighted the strong performance of the core business [8][31] - The company raised its full-year guidance, projecting over 20% adjusted EPS growth compared to the prior year [13][29] Other Important Information - The company noted that the integration of Maritime into the ESCO portfolio is ongoing and requires considerable focus from the organization [6][7] - Strong operating cash flow results were reported, with favorable working capital performance compared to the previous year [26] Q&A Session Summary Question: Update on A&D orders for Globe - Management indicated no significant changes in the order pipeline for Globe and requested patience for future details [36][37] Question: Margin progression in A&D - Management reported strong margins driven by good price flow through and favorable material costs, with a positive outlook for future quarters [39][40][41] Question: Increase in outlook for revenue and earnings - Management attributed the increase to strong performance in the Test business and incremental volume in A&D, offset by some weakness in the NRG business [48][50] Question: Impact of VACCO in 2026 - Management discussed the transition to discontinued operations for VACCO and expressed optimism about growth in A&D and Maritime segments [53][54] Question: Pace of naval deliveries - Management expects an increase in the pace of deliveries, influenced by both US and UK naval dynamics [55][56] Question: USG margins and Doble performance - Management acknowledged a temporary dip in margins due to timing of sales but remains positive about the long-term outlook [65][66] Question: Impact of recent treaty on nuclear subs - Management viewed the treaty as a positive development for the business and expressed confidence in the investments made in the Royal Navy and UK shipbuilding [71][73]

Financial Performance - Q3 FY25 - Sales increased by $62.7 million, a 26.9% increase, reaching $296.3 million compared to $233.6 million in Q3'24[13] - Adjusted EBIT increased by $17.5 million, a 38.6% increase, reaching $62.7 million compared to $45.2 million in Q3'24[13] - Adjusted EPS increased by 25%, reaching $1.60 compared to $1.28 in Q3'24[12] - Record ending backlog of $1.17 billion, a 75% increase from September 30, 2024[14] Segment Performance - A&D - Entered Orders increased by $492.3 million, a 546.5% increase, reaching $582.4 million compared to $90.1 million in Q3'24[19] - Sales increased by $49.1 million, a 56.3% increase, reaching $136.3 million compared to $87.2 million in Q3'24[19] - Adjusted EBIT increased by $19.1 million, a 94.3% increase, reaching $39.3 million compared to $20.2 million in Q3'24[19] Segment Performance - USG - Entered Orders increased by $5.5 million, a 5.5% increase, reaching $105.5 million compared to $100.0 million in Q3'24[25] - Sales increased by $2.1 million, a 2.3% increase, reaching $92.4 million compared to $90.3 million in Q3'24[25] - Adjusted EBIT decreased by $0.4 million, a -2.0% decrease, reaching $21.8 million compared to $22.2 million in Q3'24[25] Segment Performance - Test - Sales increased by $11.6 million, a 20.7% increase, reaching $67.7 million compared to $56.1 million in Q3'24[30] - Adjusted EBIT increased by $1.4 million, a 15.4% increase, reaching $10.7 million compared to $9.3 million in Q3'24[30] - Entered Orders decreased by $3.6 million, a -5.7% decrease, reaching $61.2 million compared to $64.8 million in Q3'24[30] Financial Performance - YTD Q3 FY25 - Sales increased by $97.1 million, a 15.0% increase, reaching $742.7 million compared to $645.6 million in Q3 YTD '24[38] - Adjusted EBIT increased by $30.7 million, a 28.6% increase, reaching $138.0 million compared to $107.3 million in Q3 YTD '24[38] - Adjusted EPS increased by 24.1%, reaching $3.71 compared to $2.99 in Q3 YTD '24[38] FY25 Guidance - Full year revenue from Continuing Operations is expected to be $1.075 billion - $1.105 billion[52] - Full Year Adjusted EPS from Continuing Operations is now expected to be in the range of $5.75 - $5.90, a 21% - 24% growth over FY'24[52] - Q4 Adjusted EPS from Continuing Operations is expected to be in the range of $2.04 - $2.19, a 14% - 22% growth over Q4'24[51]

[Q3 2025 Earnings Summary](index=1&type=section&id=Q3%202025%20Earnings%20Summary) [Operating Highlights](index=1&type=section&id=Operating%20Highlights) ESCO Technologies reported strong Q3 2025 results with 27% sales growth and 25% Adjusted EPS increase, achieving a record $1.17 billion backlog Q3 2025 Key Financial Metrics (vs. Q3 2024) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $296.3 million | $233.6 million | +27% | | Organic Sales | $259.2 million | $233.6 million | +11% | | GAAP EPS (Continuing Ops) | $0.96 | $1.10 | -13% | | Adjusted EPS (Continuing Ops) | $1.60 | $1.28 | +25% | | Entered Orders | $749.0 million | - | +194% | | Book-to-Bill Ratio | 2.53x | - | - | | Ending Backlog | $1.17 billion | - | Record High | - The company completed the sale of VACCO Industries on July 21, 2025, with its operating results now presented as Discontinued Operations and excluded from discussions of continuing operations[2](index=2&type=chunk) Year-to-Date Cash Flow from Operating Activities (in millions) | Category | YTD Q3 2025 | YTD Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Continuing Operations | $88 | $63 | +$25 | | Discontinued Operations | $44 | ($8) | +$52 | | **Total Cash Flow** | **$132** | **$55** | **+$77** | [CEO Commentary](index=2&type=section&id=CEO%20Commentary) The CEO highlighted ESCO's strategic transformation through the Maritime acquisition and VACCO divestiture, driving strong growth and a raised FY 2025 outlook - The company has undergone a significant transformation by acquiring ESCO Maritime Solutions and divesting VACCO Industries, strategically focusing on expanding its Navy business while exiting the space sector[4](index=4&type=chunk) - With a newly enhanced portfolio in attractive long-term growth markets and a record backlog, the company expects to continue delivering above-market growth[5](index=5&type=chunk) Q3 2025 Performance Metrics Highlighted by CEO | Metric | Q3 2025 Result | | :--- | :--- | | Sales Increase | 27% | | Adjusted EPS Increase (Continuing Ops) | 25% | | Adjusted EBIT Margin | 21.1% (+180 bps) | [Segment Performance](index=2&type=section&id=Segment%20Performance) [Aerospace & Defense (A&D)](index=2&type=section&id=Aerospace%20%26%20Defense%20(A%26D)) The A&D segment delivered exceptional Q3 results, with significant sales and Adjusted EBIT growth, and orders skyrocketing to a record $832 million backlog A&D Segment Performance - Q3 2025 vs Q3 2024 (in millions) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $136.3 | $87.2 | +56% | | Organic Sales | $99.2 | $87.2 | +14% | | Adjusted EBIT | $39.3 | $20.2 | +95% | | Adjusted EBIT Margin | 28.8% | 23.2% | +560 bps | | Entered Orders | $582 | $90 | +547% | | Book-to-Bill | 4.27x | - | - | | Ending Backlog | $832 | - | Record High | - Order strength was driven by over **$80 million** in Virginia and Columbia Class submarine orders at Globe and nearly **$50 million** in new orders at Maritime during the quarter[5](index=5&type=chunk) - Margin improvement was driven by price increases, favorable product mix, and leverage on higher volume, further boosted by the addition of the higher-margin Maritime business[5](index=5&type=chunk) [Utility Solutions Group (USG)](index=3&type=section&id=Utility%20Solutions%20Group%20(USG)) The USG segment reported modest 2% sales growth to $92.4 million in Q3 2025, with slight Adjusted EBIT margin contraction, but saw a 6% increase in entered orders to $106 million USG Segment Performance - Q3 2025 vs Q3 2024 (in millions) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $92.4 | $90.3 | +2% | | Adjusted EBIT | $21.8 | $22.2 | -2% | | Adjusted EBIT Margin | 23.6% | 24.6% | -100 bps | | Entered Orders | $106 | $100 | +6% | | Book-to-Bill | 1.14x | - | - | | Ending Backlog | $137 | - | - | - Doble achieved record quarterly orders of **$87 million**, an increase of **7%** over the prior year, driven by strength across all product lines and a large HV Test System order[9](index=9&type=chunk) [RF Test & Measurement (Test)](index=3&type=section&id=RF%20Test%20%26%20Measurement%20(Test)) The Test segment achieved strong 21% sales growth to $67.7 million in Q3 2025, with Adjusted EBIT increasing 15%, despite a slight margin decrease and a 6% decline in entered orders Test Segment Performance - Q3 2025 vs Q3 2024 (in millions) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $67.7 | $56.1 | +21% | | Adjusted EBIT | $10.7 | $9.3 | +15% | | Adjusted EBIT Margin | 15.9% | 16.6% | -70 bps | | Entered Orders | $61 | $65 | -6% | | Book-to-Bill | 0.90x | - | - | | Ending Backlog | $196 | - | - | - The decrease in orders was primarily due to lower U.S. industrial orders compared to Q3 2024, which included a large project booking, partially offset by a strong quarter for Test & Measurement[9](index=9&type=chunk) [Business Outlook – 2025](index=3&type=section&id=Business%20Outlook%20%E2%80%93%202025) [Updated FY 2025 Guidance](index=3&type=section&id=Updated%20FY%202025%20Guidance) ESCO has increased its full-year fiscal 2025 guidance, with revenue from continuing operations projected between $1.075 billion and $1.105 billion, and Adjusted EPS raised to $5.75-$5.90 Updated FY 2025 Revenue Guidance (Continuing Operations) (in millions) | Guidance Component | Amount | | :--- | :--- | | Prior Guidance (May) | $1,180 | | Less: Discontinued Ops (VACCO) | ($125) | | Guidance Increase | $20 | | **Updated Sales Guidance** | **$1,075 - $1,105** | Updated FY 2025 Adjusted EPS Guidance (Continuing Operations) | Guidance Component | Amount | | :--- | :--- | | Previous Guidance (May) | $5.85 - $6.15 | | Less: Discontinued Ops (VACCO) | ($0.50) | | Guidance Increase | $0.40 - $0.25 | | **Updated Adj. EPS Guidance** | **$5.75 - $5.90** | - Management expects Q4 2025 Adjusted EPS from Continuing Operations to be in the range of **$2.04 to $2.19**, representing **14% to 22%** growth over Q4 2024[11](index=11&type=chunk) [Shareholder Information](index=4&type=section&id=Shareholder%20Information) [Dividend Payment](index=4&type=section&id=Dividend%20Payment) The company has declared its next quarterly cash dividend of $0.08 per share, scheduled for payment in October 2025 - A quarterly cash dividend of **$0.08 per share** will be paid on October 16, 2025, to stockholders of record on October 2, 2025[12](index=12&type=chunk) [Conference Call](index=4&type=section&id=Conference%20Call) ESCO will host a conference call and live webcast on August 7 at 4:00 p.m. Central Time to discuss its Q3 2025 financial results - The company will host a conference call with a live audio webcast and slide presentation on August 7 at 4:00 p.m. Central Time to discuss Q3 2025 results[13](index=13&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The income statement for Q3 2025 shows net sales of $296.3 million, with earnings from continuing operations decreasing to $24.8 million due to increased costs Q3 Statement of Operations Summary (in thousands) | Account | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net Sales | $296,344 | $233,568 | | Total costs and expenses | $263,275 | $197,602 | | Earnings from continuing operations | $24,755 | $28,312 | | Net earnings | $26,065 | $29,230 | | Diluted GAAP EPS (Continuing Ops) | $0.96 | $1.10 | | Diluted Adjusted EPS (Continuing Ops) | $1.60 | $1.28 | YTD Q3 Statement of Operations Summary (in thousands) | Account | YTD Q3 2025 | YTD Q3 2024 | | :--- | :--- | :--- | | Net Sales | $742,714 | $645,621 | | Total costs and expenses | $649,428 | $565,251 | | Earnings from continuing operations | $71,445 | $63,330 | | Net earnings | $80,571 | $67,618 | | Diluted GAAP EPS (Continuing Ops) | $2.76 | $2.46 | | Diluted Adjusted EPS (Continuing Ops) | $3.71 | $2.99 | [Condensed Business Segment Information](index=8&type=section&id=Condensed%20Business%20Segment%20Information) This section details ESCO's segment performance, with Aerospace & Defense being the largest contributor to Q3 2025 sales and Adjusted EBIT, showing substantial year-over-year growth Q3 2025 Segment Performance (in thousands) | Segment | Net Sales | As Adjusted EBIT | | :--- | :--- | :--- | | Aerospace & Defense | $136,324 | $39,319 | | USG | $92,357 | $21,789 | | Test | $67,663 | $10,732 | | **Total** | **$296,344** | **$62,656** | YTD Q3 2025 Segment Performance (in thousands) | Segment | Net Sales | As Adjusted EBIT | | :--- | :--- | :--- | | Aerospace & Defense | $307,819 | $81,016 | | USG | $269,784 | $63,140 | | Test | $165,111 | $21,988 | | **Total** | **$742,714** | **$138,002** | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, ESCO's balance sheet reflects significant changes due to acquisition activity, with total assets increasing to $2.53 billion and long-term debt to $505 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Total current assets | $754,723 | $668,649 | | Goodwill & Intangibles | $1,505,634 | $933,459 | | **Total Assets** | **$2,526,385** | **$1,838,620** | | Total current liabilities | $496,840 | $349,854 | | Long-term debt | $505,000 | $102,000 | | **Total Shareholders' Equity** | **$1,326,614** | **$1,237,350** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2025, net cash from operating activities significantly increased to $132.0 million, while investing activities used $510.2 million primarily for acquisitions YTD Cash Flow Summary (in thousands) | Cash Flow Activity | YTD Q3 2025 | YTD Q3 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $132,002 | $55,454 | | Net cash used by investing activities | ($510,200) | ($89,888) | | Net cash provided by financing activities | $390,599 | $55,301 | | **Net increase in cash** | **$12,853** | **$21,176** | [Other Selected Financial Data](index=12&type=section&id=Other%20Selected%20Financial%20Data) The company's total backlog reached a record $1.165 billion at the end of Q3 2025, driven by $749 million in new orders, primarily from the Aerospace & Defense segment Q3 2025 Backlog and Orders by Segment (in thousands) | Segment | Beginning Backlog | Entered Orders | Ending Backlog | | :--- | :--- | :--- | :--- | | A&D | $385,491 | $582,354 | $831,521 | | USG | $124,274 | $105,524 | $137,441 | | Test | $202,971 | $61,152 | $196,460 | | **Total** | **$712,736** | **$749,030** | **$1,165,422** | [Reconciliation of Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP EPS to Adjusted EPS, showing that Q3 2025 GAAP EPS of $0.96 was adjusted by $0.64 per share, primarily for acquisition-related costs, to reach $1.60 Q3 2025 EPS Reconciliation (Continuing Operations) | Description | Per Share Amount | | :--- | :--- | | GAAP EPS | $0.96 | | Adjustments | $0.64 | | **As Adjusted EPS** | **$1.60** | - The primary adjustments for Q3 2025 included **$0.40** for acquisition-related amortization, **$0.15** for corporate acquisition costs, and **$0.08** for Maritime inventory step-up charges and stamp duties[39](index=39&type=chunk) [Appendix](index=4&type=section&id=Appendix) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains the company's standard safe harbor statement, advising that all forward-looking guidance is subject to numerous risks and uncertainties - Management's guidance and other forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including but not limited to supply chain disruptions, economic conditions, government funding availability, and competition[14](index=14&type=chunk)[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) ESCO explains its use of non-GAAP financial measures like EBIT, Adjusted EBIT, and Adjusted EPS to assess operational profitability and facilitate industry comparisons - The company uses non-GAAP measures like EBIT, Adjusted EBIT, and Adjusted EPS to assess operational profitability and allocate resources[16](index=16&type=chunk)[17](index=17&type=chunk) - These measures are presented as supplemental information to facilitate comparisons with other companies and are not intended to replace GAAP measures[17](index=17&type=chunk)

Core Insights - ESCO Technologies Inc. reported a 27% increase in Q3 sales to $296 million, while GAAP EPS from continuing operations decreased by 13% to $0.96. Adjusted EPS from continuing operations increased by 25% to $1.60 [1][4][5] - The company raised its FY 2025 adjusted EPS guidance to a range of $5.75 to $5.90, reflecting a growth of 21% to 24% [1][10][11] Financial Performance - Q3 2025 sales increased by $62.7 million (27%) compared to Q3 2024, with organic sales (excluding Maritime sales) increasing by $25.6 million (11%) [5][6] - Entered orders surged by 194% to $749 million, resulting in a book-to-bill ratio of 2.53x and a record backlog of $1.17 billion [1][5][7] - Net cash provided by operating activities from continuing operations was $88 million YTD, an increase of $25 million compared to the prior year [5] Segment Performance - Aerospace & Defense (A&D) segment sales increased by $49.1 million (56%) to $136.3 million, driven by a 200% increase in Navy sales [6][29] - Utility Solutions Group (USG) sales increased by $2.1 million (2%) to $92.4 million, with Doble's sales up by 1% and NRG sales up by 8% [12][29] - Test & Measurement segment sales increased by $11.6 million (21%) to $67.7 million, with EBIT and adjusted EBIT increasing to $10.7 million [12][29] Business Outlook - The company expects FY 2025 revenue from continuing operations to be in the range of $1.075 to $1.105 billion, reflecting a 17% to 20% increase over the prior year [10][11] - Q4 adjusted EPS from continuing operations is expected to be in the range of $2.04 to $2.19, representing a growth of 14% to 22% over Q4 2024 [13] Dividend Information - The next quarterly cash dividend of $0.08 per share is scheduled for payment on October 16, 2025, to stockholders of record on October 2, 2025 [14]

Core Insights - ESCO Technologies Inc. has completed the divestiture of VACCO Industries to RBC Bearings Incorporated for net proceeds of approximately $275 million, reflecting customary working capital adjustments since the announcement on May 20, 2025 [1] Company Overview - ESCO Technologies is a global provider of highly engineered products and solutions, serving diverse end-markets including aviation, Navy, space, and industrial sectors [2] - The company manufactures filtration and fluid control products, advanced composites, and power management solutions, and is an industry leader in RF test and measurement products and systems [2] - ESCO has a global presence with offices and manufacturing facilities worldwide, headquartered in St. Louis, Missouri [2]

Core Viewpoint - ESCO Technologies Inc. is set to report its third quarter financial results on August 7, 2025, followed by a conference call to discuss the results and related commentary [1]. Company Overview - ESCO Technologies is a global provider of highly engineered products and solutions, serving diverse end-markets including aviation, Navy, space, and industrial sectors [3]. - The company manufactures filtration and fluid control products, advanced composites, and power management solutions [3]. - ESCO is recognized as an industry leader in designing and manufacturing RF test and measurement products and systems, along with providing diagnostic instruments, software, and services to industrial power users and the electric utility and renewable energy industries [3]. - The company is headquartered in St. Louis, Missouri, and has offices and manufacturing facilities worldwide [3].

Company Overview - Esco Technologies (ESE) currently holds a Momentum Style Score of B, indicating a positive momentum outlook [3] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [4] Price Performance - ESE shares have increased by 7.19% over the past week, outperforming the Zacks Manufacturing - Electronics industry, which rose by 5.16% during the same period [6] - Over the last quarter, ESE shares have surged by 36.37%, and they have gained 83.33% over the past year, significantly outperforming the S&P 500, which increased by 10.42% and 14.64% respectively [7] Trading Volume - The average 20-day trading volume for ESE is 208,681 shares, which serves as a useful indicator of market interest and price movement [8] Earnings Outlook - In the past two months, one earnings estimate for ESE has been revised upward, while none have been revised downward, leading to an increase in the consensus estimate from $5.70 to $6.07 [10] - For the next fiscal year, one estimate has also moved upwards with no downward revisions, indicating a positive earnings outlook [10] Conclusion - Considering the positive price performance, trading volume, and favorable earnings outlook, ESE is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a compelling investment option [12]

Group 1 - Esco Technologies (ESE) is currently outperforming its peers in the Industrial Products sector, with a year-to-date return of 45.2% compared to the sector average of 2.7% [4] - The Zacks Consensus Estimate for Esco Technologies' full-year earnings has increased by 6.5% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - Esco Technologies holds a Zacks Rank of 1 (Strong Buy), suggesting it is poised to outperform the broader market in the next one to three months [3] Group 2 - Esco Technologies is part of the Manufacturing - Electronics industry, which consists of 17 stocks and currently ranks 53 in the Zacks Industry Rank, with an average gain of 2.6% this year [6] - Another notable stock in the Industrial Products sector is Kion Group (KIGRY), which has returned 65.5% year-to-date and has a Zacks Rank of 2 (Buy) [5] - Kion Group's consensus estimate for current year EPS has increased by 25.4% over the past three months, highlighting strong performance within its industry [5]