Esco Technologies (ESE) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.The power of ...

Investors interested in Industrial Products stocks should always be looking to find the best-performing companies in the group. Esco Technologies (ESE) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Industrial Products peers, we might be able to answer that question.Esco Technologies is one of 189 companies in the Industrial Products group. ...

Core Viewpoint - ESCO Technologies Inc. has entered into a definitive agreement to sell VACCO Industries to RBC Bearings Incorporated for expected gross cash proceeds of $310 million, aligning with its long-term strategy to focus on high-growth end-markets [1][2][3] Group 1: Transaction Details - The transaction is subject to customary regulatory approvals and is expected to yield a sizable book gain, with net proceeds planned for debt reduction related to a previous acquisition [2] - VACCO Industries has been part of ESCO since its formation in 1990 and is recognized as a key supplier of mission-critical solutions [3] Group 2: Strategic Implications - The divestiture supports ESCO's strategy to concentrate on core high-growth markets, enhancing its portfolio focus [3] - The CEO of ESCO expressed confidence in the future of VACCO under RBC Bearings, indicating a positive outlook for the company post-transaction [3] Group 3: Company Overview - ESCO Technologies is a global provider of engineered products and solutions across diverse end-markets, including aviation, Navy, space, and industrial sectors [4] - The company specializes in manufacturing filtration and fluid control products, advanced composites, and power management solutions, and is a leader in RF test and measurement products [4]

Revenue Performance - Total revenues for the three months ended March 31, 2025, were $265.5 million, a 6.6% increase from $249.1 million in the same period of 2024[44] - For the six months ended March 31, 2025, total revenues reached $512.5 million, compared to $467.4 million for the same period in 2024, reflecting a growth of 9.6%[44] - The Company reported net earnings for common stockholders of $31.0 million for the three months ended March 31, 2025, compared to $23.2 million for the same period in 2024, representing a 33.5% increase[39] Tax and Equity - The effective income tax rate for the second quarter of 2025 was 23.4%, up from 20.5% in the second quarter of 2024[38] - The Company’s total equity as of March 31, 2025, was $1.277 billion, an increase from $1.166 billion as of March 31, 2024[39] Debt and Borrowings - As of March 31, 2025, total borrowings decreased to $88 million from $122 million as of September 30, 2024[34] - The Company had approximately $407 million available to borrow under the Credit Facility as of March 31, 2025, excluding the Incremental Facility[36] - The Company’s total long-term debt, less current portion, was $68 million as of March 31, 2025, down from $102 million as of September 30, 2024[34] - The weighted average interest rates for borrowings were 5.8% for the three months ending March 31, 2025, compared to 6.8% for the same period in 2024[37] Contracts and Performance Obligations - As of March 31, 2025, the company had $932.3 million in remaining performance obligations, with approximately 74% expected to be recognized as revenue in the next twelve months[49] - Contract assets, contract liabilities, and accounts receivable totaled $125.3 million, $138.5 million, and $218.1 million, respectively, as of March 31, 2025[50] - The company recognized approximately $56 million in revenues during the first six months of 2025 that were included in the contract liabilities balance at September 30, 2024[50] Lease Costs and Terms - The total lease costs for the three months ended March 31, 2025, amounted to $2,574,000, compared to $2,462,000 for the same period in 2024, reflecting an increase of 4.5%[55] - The weighted-average remaining lease term for operating leases was 10.2 years as of March 31, 2025, down from 10.8 years in 2024[55] - The present value of net minimum lease payments for operating leases was $40.6 million as of March 31, 2025[56] - The company’s finance lease costs for the six months ended March 31, 2025, totaled $1,152,000, compared to $1,204,000 for the same period in 2024[55] - The company’s operating cash flows from operating leases for the six months ended March 31, 2025, were $3,851,000, compared to $3,643,000 for the same period in 2024, indicating a growth of 5.7%[55] Acquisitions - The Company plans to acquire Ultra PMES Limited and other subsidiaries, with an incremental facility of up to $375 million to finance the acquisition[35] - The company completed the acquisition of the Signature Management & Power business for approximately $550 million in cash on April 25, 2025, enhancing its Aerospace & Defense segment[60] Risk Management - The company uses derivative financial instruments to manage market risks related to interest rates and foreign currency exchange rates, with no material changes since September 30, 2024[92]

Financial Data and Key Metrics Changes - Orders increased by nearly 22% in the quarter, resulting in a record backlog of $932 million [15] - Sales rose by 6.6% in the quarter, with all three segments contributing to the growth [15] - Adjusted EBIT margins were at 18%, with incremental margins on sales growth at 56%, leading to adjusted earnings per share of $1.35, a 24% increase year-over-year [15][21] Business Segment Data and Key Metrics Changes - **Aerospace and Defense**: Orders were up 5% with nearly 8% sales growth, driven by commercial aerospace and Navy orders. Adjusted EBIT margins increased by 400 basis points, with EBIT dollars up 28% due to favorable pricing and mix [16][17] - **Utility Solutions Group**: Orders grew nearly 17%, with sales growth of 4%. Adjusted EBIT margins improved to 23%, up 290 basis points year-over-year [18] - **Test Business**: Orders surged by 75%, with sales up 9%. Margins improved to 12.4%, benefiting from volume leverage and price increases [19] Market Data and Key Metrics Changes - The aerospace and defense market is expected to continue growing despite macro uncertainties, with strong demand for commercial and defense aircraft [8] - The utility market is experiencing a favorable business cycle, driven by increased electricity demand and aging infrastructure [11] - The renewable energy market is recalibrating, but order activity is improving compared to the previous year [12] Company Strategy and Development Direction - The company completed a major acquisition of SMMP, rebranding it as ESCO Maritime Solutions, which is expected to enhance margins and growth [10] - The strategic planning process assessed end markets and strategies to achieve above-market growth [7] - The company remains focused on navigating macroeconomic challenges while leveraging its diverse business mix [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic challenges and highlighted strong operational performance [5][25] - The outlook for the aerospace and defense markets remains positive, with expectations for continued growth despite recent order moderation [8] - Management acknowledged potential impacts from tariffs but emphasized proactive measures to mitigate risks [34] Other Important Information - The company updated its earnings guidance for 2025, projecting adjusted earnings per share in the range of $5.85 to $6.15 [23] - The acquisition of ESCO Maritime Solutions is expected to contribute adjusted earnings per share of $0.20 to $0.30 for the remainder of the fiscal year [23] Q&A Session Summary Question: Update on the sale of VACCO - Management indicated ongoing interest in the sale process, with a decision expected by May [28] Question: Performance of the underlying business - Management noted improvements in overall business performance, with stabilization observed compared to previous years [30] Question: Clarification on tariff impacts - The estimated tariff impact of $2 million to $4 million is a net figure, factoring in pricing adjustments and operational changes [34] Question: Cash generation from Maritime Solutions - Management expects strong cash flow benefits from the Maritime acquisition, with ongoing assessments as integration progresses [42] Question: Thoughts on shipbuilding budgets and orders - Management expressed confidence in the shipbuilding budget and order flow, particularly for Navy programs [45][76] Question: Insights on commercial aircraft orders - Management noted a moderation in commercial aircraft orders but remains optimistic about future demand normalization [72] Question: Pro forma capital structure and leverage profile - Management indicated a leverage ratio of just over 2.2 at closing, with expectations to reduce it below 2 as debt is paid down [81]

ESCO (ESE) Q2 2025 Earnings Call May 07, 2025 05:00 PM ET Company Participants Kate Lowrey - VP-IRBryan Sayler - President & CEOChris Tucker - Senior Vice President and Chief Financial OfficerJon Tanwanteng - Managing DirectorTommy Moll - Managing Director Conference Call Participants Josh Sullivan - MD & Senior Equity Research Analyst Operator Good day, and welcome to the Q2 twenty twenty five ESCO Technologies, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After ...

Financial Data and Key Metrics Changes - Orders increased by nearly 22% in the quarter, resulting in a record backlog of $932 million [15] - Sales grew by 6.6% in the quarter, with all three segments contributing to the increase [15] - Adjusted EBIT margins were at 18%, with incremental margins on sales growth at 56%, leading to adjusted earnings per share of $1.35, a 24% increase year-over-year [15][21] Business Segment Data and Key Metrics Changes - **Aerospace and Defense**: Orders were up 5% with nearly 8% sales growth, driven by commercial aerospace and Navy orders. Adjusted EBIT margins increased by 400 basis points, with EBIT dollars up 28% due to favorable pricing and mix [16][18] - **Utility Solutions Group**: Orders grew nearly 17%, with sales up 4%. Doble experienced 5% sales growth, while NRG's sales were flat. Adjusted EBIT margins improved to 23%, up 290 basis points year-over-year [17][19] - **Test Business**: Orders surged by 75% compared to last year, with sales up 9%. Margins improved to 12.4%, benefiting from volume leverage and price increases [19][20] Market Data and Key Metrics Changes - The aerospace market shows fundamental demand for additional commercial and defense aircraft, with expectations for continued growth despite recent moderation in order rates [8][9] - The utility market is experiencing a favorable business cycle, driven by increased electricity demand and aging infrastructure [11][12] - The test business is recovering, with strong activity in EMC testing, healthcare, and industrial markets [13][14] Company Strategy and Development Direction - The company completed a major acquisition of SMMP, rebranding it as ESCO Maritime Solutions, which is expected to enhance margin and growth profiles [10][24] - The strategic planning process indicates a focus on delivering above-market growth by assessing end markets and strategies [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and geopolitical risks, highlighting strong underlying business conditions [4][5] - The long-term outlook for aerospace and defense remains positive, with expectations for continued growth despite short-term challenges [7][9] - The company anticipates growth in the utility sector due to increasing electricity demand and the importance of renewable technologies [12] Other Important Information - The company expects sales growth of 6% to 8% for the year, with adjusted earnings per share guidance increased to a range of $5.65 to $5.85 [23][24] - The acquisition is projected to contribute adjusted earnings per share in the range of $0.20 to $0.30 [23] Q&A Session Summary Question: Update on the sale of VACCO - Management indicated ongoing interest in the sale process, with a decision expected by May [28] Question: Performance of the underlying business - The business has stabilized with improved performance compared to last year, although margins remain lower than other segments [30] Question: Clarification on tariff impacts - The estimated tariff impact of $2 million to $4 million is a net number, factoring in mitigation efforts [32][34] Question: Cash generation from Maritime Solutions - Management expects strong cash flow benefits from the Maritime acquisition, with ongoing assessments as integration progresses [40] Question: Thoughts on the 2025 and 2026 budget for shipbuilding - Management is optimistic about the shipbuilding budget, noting strong visibility and progress in programs [42][43] Question: Commercial aircraft orders moderation - Management noted a slight moderation in orders due to inventory management but remains confident in future growth [68] Question: Status of Department of Defense programs - Programs related to submarines and Navy initiatives are prioritized, with a positive order flow expected [70]

ESCO Technologies Second Quarter FY 2025 Earnings Call Bryan Sayler President & CEO Chris Tucker Sr. Vice President & CFO May 7, 2025 1 Forward Looking Statement Statements in this presentation 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" with ...

Financial Performance - Q2 2025 sales increased by 7% to $266 million compared to $249.1 million in Q2 2024[3] - Q2 2025 GAAP EPS rose by 33% to $1.20 per share, up from $0.90 per share in Q2 2024[3] - Q2 2025 adjusted EPS increased by 24% to $1.35 per share, compared to $1.09 per share in Q2 2024[3] - Net sales for the six months ended March 31, 2025, increased to $512,545 thousand from $467,443 thousand, representing an increase of 9% year-over-year[25] - Net earnings for the six months ended March 31, 2025, rose to $54,506 thousand compared to $38,388 thousand for the same period in 2024, reflecting a growth of 42%[25] - Diluted earnings per share (EPS) on a GAAP basis increased to $2.11 for the six months ended March 31, 2025, up from $1.49 in the prior year[25] - Adjusted net earnings for the six months ended March 31, 2025, were $62,727 thousand, excluding $8.2 million of after-tax charges, compared to $47,622 thousand in the prior year[31] Segment Performance - The Aerospace & Defense segment saw sales increase by 8% to $123.4 million, with EBIT rising to $30.3 million[7] - Utility Solutions Group sales increased by 4% to $90.8 million, with EBIT growing to $20.8 million[7] - RF Test & Measurement segment sales rose by 9% to $51.4 million, with entered orders increasing by 75% to $77 million[7] - Aerospace & Defense segment net sales for Q2 2025 were $123,369 thousand, an increase from $114,701 thousand in Q2 2024, representing an 8% growth[27] - The Test segment reported net sales of $51,383 thousand in Q2 2025, up from $47,119 thousand in Q2 2024, reflecting a 5% increase[27] Orders and Backlog - Q2 2025 entered orders were $290.8 million, resulting in a book-to-bill ratio of 1.10x and a record backlog of $932 million[3] - The ending backlog as of March 31, 2025, was $932,269 thousand, up from $878,969 thousand at the beginning of the fiscal year, indicating strong order growth[38] Guidance and Projections - For FY 2025, organic sales are expected to grow by 6% to 8%, with Maritime contributing sales of $90 to $100 million[9] - Adjusted EPS guidance for FY 2025 has been raised to a range of $5.65 to $5.85, reflecting 18% to 23% growth over the prior year[10] - Q3 2025 adjusted EPS guidance without Maritime is projected to be between $1.50 and $1.60, with Maritime expected to add $0.08 to $0.12[12] Cash and Assets - Total current assets decreased slightly to $660,753 thousand as of March 31, 2025, from $668,649 thousand as of September 30, 2024[34] - Cash and cash equivalents at the end of the period were $57,397 thousand, down from $65,963 thousand at the beginning of the period[36] EPS Adjustments - Q2 2024 GAAP EPS is $0.90, with adjustments leading to an adjusted EPS of $1.09, reflecting a $0.19 adjustment primarily due to acquisition-related charges[41] - The $0.19 EPS adjustment includes $6.2 million in pre-tax charges, resulting in a net impact of $4.8 million after tax benefits[42] - YTD Q2 2025 GAAP EPS is $2.11, with adjustments resulting in an adjusted EPS of $2.42, reflecting a $0.31 adjustment mainly from acquisition-related amortization[43] - The $0.31 EPS adjustment consists of $10.7 million in pre-tax charges, leading to a net impact of $8.2 million after tax benefits[44] - YTD Q2 2024 GAAP EPS is $1.49, with adjustments leading to an adjusted EPS of $1.85, reflecting a $0.36 adjustment primarily due to acquisition costs and restructuring charges[45] - The $0.36 EPS adjustment includes $12 million in pre-tax charges, resulting in a net impact of $9.2 million after tax benefits[46]

Core Insights - ESCO Technologies Inc. reported a 7% increase in Q2 sales to $266 million, with GAAP EPS rising 33% to $1.20 and adjusted EPS increasing 24% to $1.35 [1][6][29] - The company experienced a 22% increase in orders, resulting in a book-to-bill ratio of 1.10x and a record backlog of $932 million [1][6][44] - The acquisition of SM&P, now known as ESCO Maritime Solutions, is expected to enhance the company's naval product offerings [4][10] Financial Performance - Q2 2025 sales increased by $16.4 million (7%) compared to Q2 2024, with net earnings rising to $31.0 million from $23.2 million [6][25] - Adjusted EBITDA margin expanded by 250 basis points, reflecting strong revenue growth across all segments [3][6] - Year-to-date net cash provided by operating activities was $58 million, an increase of $39 million compared to the prior year [6] Segment Performance - Aerospace & Defense segment sales increased by $8.7 million (8%) to $123.4 million, driven by Navy and aerospace sales [7][29] - Utility Solutions Group (USG) sales rose by $3.5 million (4%) to $90.8 million, with a strong performance in offline testing products [8][29] - Test segment sales increased by $4.3 million (9%) to $51.4 million, primarily due to higher Test and Measurement orders [15][29] Business Outlook - The company expects organic sales growth of 6% to 8% for FY 2025, with Maritime contributing sales of $90 to $100 million [11][12] - Adjusted EPS guidance for FY 2025 has been raised to a range of $5.65 to $5.85, reflecting continued market strength [12][13] - Q3 2025 adjusted EPS guidance without Maritime is projected to be between $1.50 and $1.60 [14] Dividend Information - The next quarterly cash dividend of $0.08 per share is scheduled for payment on July 17, 2025 [16]