ESCO Technologies (ESE) is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower after a recent earnings beat.  The company is best known for its software that enables the vision of what energy information can accomplish for a utility. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.DescriptionESCO Technologies, Inc. is a producer of engineered products and systems, which engages in the provision of utility, industrial, aerospace, and c ...

ESCO Technologies Inc. (NYSE:ESE) Q1 2024 Earnings Conference Call February 8, 2024 5:00 PM ET Company Participants Kate Lowrey - Vice President of Investor Relations Bryan Sayler - President & Chief Executive Officer Chris Tucker - Senior Vice President & Chief Financial Officer Conference Call Participants Tommy Moll - Stephens John Franzreb - Sidoti & Company Jonathan Tanwanteng - CJS Securities Operator Good day, and thank you for standing by. Welcome to the First Quarter 2024 ESCO Technologies Earnings ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-10596 ESCO TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1554045 (State or other jurisdi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-10596 ESCO Technologies Inc. (Exact name of registrant as specified in its charter) Missouri 43-1554045 (State or other jurisdic ...

256.5 272.6 Q4'22 Q4'23 Sales 42.8 44.0 Q4'22 Q4'23 Adjusted EBIT 16.7% 16.1% $1.21 $1.25 Q4'22 Q4'23 Adjusted EPS 244.7 339.6 Q4'22 Q4'23 Entered Orders Entered Orders • Record Quarterly Orders • Orders +$95M (+39%) - Strength in Aerospace, Navy, Test & Utilities • Q4 Book-to-Bill of 1.25 • Record Ending Backlog +$67M (+9%) from 6/30/23 Sales • Sales increased 6% – Organic +5% / CMT Acquisition +1% • Organic Growth driven by commercial and defense aerospace, utility, and renewables spending 2 Q4 Results ($ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-10596 ESCO TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1554045 (State or other jurisdictio ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-10596 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) ESCO TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1554045 (State or other jurisdicti ...

ESCO Technologies Inc. (NYSE:ESE) Q1 2023 Results Conference Call February 8, 2023 5:00 PM ET Company Participants Bryan Sayler - President and CEO Chris Tucker - SVP and CFO Kate Lowrey - VP, IR Conference Call Participants Tommy Moll - Stephens Jon Tanwanteng - CJS Securities Operator Good day, and thank you for standing by. Welcome to the First Quarter 2023 ESCO Technologies Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. On the call tod ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-10596 ESCO TECHNOLOGIES INC. (Exact name of registrant as specified in its charter) MISSOURI 43-1554045 (State or other jurisdi ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) ESCO Technologies Inc. provides engineered products across Aerospace & Defense, Utility Solutions, and RF Shielding and Test segments - The company operates through three main segments: **Aerospace & Defense (A&D)**, **Utility Solutions Group (USG)**, and **RF Shielding and Test (Test)**[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) Revenue Contribution by Segment (FY2020-2022) | Segment | 2022 Revenue % | 2021 Revenue % | 2020 Revenue % | | :--- | :--- | :--- | :--- | | Aerospace & Defense (A&D) | 41% | 44% | 48% | | Utility Solutions Group (USG) | 32% | 28% | 26% | | RF Shielding and Test (Test) | 27% | 28% | 26% | - Sales to the U.S. Government, primarily from the A&D segment, accounted for approximately **27% of total revenue** in 2022. International sales made up about **30% of total revenue** in the same year[26](index=26&type=chunk)[27](index=27&type=chunk) Total Company Backlog (as of Sep 30, in millions) | Metric | Sep 30, 2022 | Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Total Backlog | $695.0M | $592.0M | +17.4% | | A&D Backlog | $408.3M | $367.2M | | | USG Backlog | $128.1M | $91.6M | | | Test Backlog | $158.6M | $133.2M | | - As of September 30, 2022, the company employed **2,922 people**, with **18%** located in 17 foreign countries. The average tenure of the workforce was **nine years**[41](index=41&type=chunk)[43](index=43&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from COVID-19, government funding, international operations, supply chain, IT, and acquisitions - **COVID-19 Risks:** The pandemic continues to create economic and operational uncertainties, with potential for contract postponements, supply chain disruptions, and facility closures[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - **Government & Aerospace Risks:** Sales to the U.S. Government accounted for **26% to 28% of revenues** over the past three years, making the company susceptible to changes in government funding and program terminations[66](index=66&type=chunk) - **International Risks:** Approximately **30% of net sales** in 2022 were to customers outside the U.S., exposing the company to currency fluctuations, tariffs, trade disputes, and geopolitical instability, such as the conflict in Ukraine[74](index=74&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) - **Operational & Technology Risks:** The company faces risks from IT security threats, reliance on a small number of third-party suppliers for critical components (e.g., Doble relies on one supplier for **23% of its products**), and price inflation on raw materials like steel, copper, and titanium[85](index=85&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk) - **Strategic Risks:** The growth strategy includes acquisitions, which carry integration risks. The company also faces challenges in retaining qualified key employees, particularly experienced engineers, due to a tight labor market[104](index=104&type=chunk)[105](index=105&type=chunk)[108](index=108&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[113](index=113&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company's properties total approximately **1.62 million square feet**, a mix of owned and leased facilities globally - The company's physical properties total approximately **1.62 million square feet**, with a mix of owned (**47%**) and leased (**53%**) facilities[114](index=114&type=chunk) - Major facilities are located in California, Texas, Oklahoma, Massachusetts, Vermont, and Maryland, supporting all three operating segments and corporate functions[115](index=115&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management expects no material adverse effect on its financial condition - Management does not expect current legal proceedings to have a material adverse effect on the company's financial condition[117](index=117&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[117](index=117&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (ESE) trades on the NYSE, with a performance graph comparing its 5-year return to key indices - The company's common stock (ticker: **ESE**) is listed on the New York Stock Exchange[120](index=120&type=chunk) 5-Year Cumulative Total Return Comparison | Index | 9/30/17 | 9/30/18 | 9/30/19 | 9/30/20 | 9/30/21 | 9/30/22 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | ESCO Technologies Inc. | $100.00 | $114.13 | $134.04 | $136.42 | $130.83 | $125.19 | | Russell 2000 Index | $100.00 | $115.24 | $104.99 | $105.40 | $155.66 | $119.08 | | S&P Small Cap 600 Industrials | $100.00 | $121.53 | $112.63 | $105.97 | $155.41 | $134.57 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company achieved strong financial performance in FY2022, with significant sales growth, increased earnings, and robust cash flow FY 2022 Financial Highlights vs. FY 2021 (in millions) | Metric | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Sales | $857.5M | $715.4M | | Net Earnings | $82.3M | $63.5M | | Diluted EPS (GAAP) | $3.16 | $2.42 | | Diluted EPS (As Adjusted) | $3.21 | $2.59 | | Net Cash from Operations | $135.3M | $123.1M | | Backlog | $695.0M | $592.0M | - The **19.9% increase in net sales** was composed of **$90 million in organic growth** and approximately **$52 million from recent acquisitions**[148](index=148&type=chunk) - The company's critical accounting policies involve significant management estimates and judgments, particularly in revenue recognition for long-term contracts, income tax liabilities, and the annual impairment review of goodwill and other long-lived assets[183](index=183&type=chunk)[184](index=184&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Fiscal 2022 net sales increased **19.9%** to **$857.5 million**, with all segments contributing to growth and EBIT rising **34.3%** Net Sales by Segment (FY2022 vs. FY2021, in millions) | Segment | FY 2022 Sales | FY 2021 Sales | % Change | | :--- | :--- | :--- | :--- | | A&D | $351.4M | $314.8M | 11.6% | | USG | $278.4M | $202.9M | 37.2% | | Test | $227.7M | $197.7M | 15.2% | | **Total** | **$857.5M** | **$715.4M** | **19.9%** | - New orders in 2022 were **$960.5 million**, resulting in a book-to-bill ratio of **1.12x**, and backlog grew to **$695.0 million**[146](index=146&type=chunk)[155](index=155&type=chunk) EBIT by Segment (FY2022 vs. FY2021, in millions) | Segment | FY 2022 EBIT | FY 2021 EBIT | % Change | | :--- | :--- | :--- | :--- | | A&D | $68.4M | $56.5M | 21.1% | | USG | $57.6M | $40.9M | 40.8% | | Test | $32.6M | $27.6M | 18.1% | | Corporate | ($47.3M) | ($42.1M) | (12.4)% | | **Total** | **$111.3M** | **$82.9M** | **34.3%** | - The effective tax rate increased to **22.7%** in 2022 from **21.3%** in 2021, primarily due to higher state income tax expense and reduced research credit benefits[170](index=170&type=chunk) [Capital Resources and Liquidity](index=38&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintained a strong liquidity position in 2022, with net cash from operations at **$135.3 million** and a net debt of **$55.3 million** - Net cash provided by operating activities was **$135.3 million** in 2022, an increase from **$123.1 million** in 2021[175](index=175&type=chunk) - Net cash used in investing activities was **$55.9 million**, primarily for capital expenditures (**$32.1 million**) and capitalized software (**$12.9 million**). This was a significant decrease from **$202.4 million** in 2021, which included major acquisitions[175](index=175&type=chunk)[177](index=177&type=chunk) - At September 30, 2022, the company had a net debt position of **$55.3 million** (total debt of **$153.0 million** less cash of **$97.7 million**)[146](index=146&type=chunk) - The company repurchased approximately **257,500 shares** for **$20.0 million** and paid dividends of **$0.32 per share**, totaling **$8.3 million** in 2022[180](index=180&type=chunk)[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, managed through derivative financial instruments - Primary market risks are identified as changes in interest rates and foreign currency exchange rates[199](index=199&type=chunk) - The company selectively uses derivative financial instruments, including forward contracts and swaps, to manage these risks[199](index=199&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that the company's disclosure controls and internal control over financial reporting were effective - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[204](index=204&type=chunk) - Management concluded that the company maintained effective internal control over financial reporting as of September 30, 2022, based on the COSO framework[206](index=206&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the fourth quarter of fiscal 2022[208](index=208&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=46&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[213](index=213&type=chunk) [Executive Compensation](index=46&type=section&id=Item%2011.%20Executive%20Compensation) Required information is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[215](index=215&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=46&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[216](index=216&type=chunk)[217](index=217&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=46&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Required information is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[218](index=218&type=chunk) [Principal Accountant Fees and Services](index=46&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Required information is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[219](index=219&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=47&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and various exhibits filed as part of the Form 10-K report - The Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are included in the report[222](index=222&type=chunk) - A comprehensive list of exhibits is provided, including the company's Restated Articles of Incorporation, Bylaws, Credit Agreement, and various employee and director compensation plans[223](index=223&type=chunk) Financial Information [Reports of Independent Registered Public Accounting Firm](index=54&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued unqualified opinions on FY2022 financial statements and internal controls, noting long-term contract cost estimation as a critical audit matter - Grant Thornton LLP issued an unqualified opinion on the FY2022 financial statements and the effectiveness of internal controls over financial reporting[239](index=239&type=chunk)[240](index=240&type=chunk) - A critical audit matter for the FY2022 audit was the judgment required in estimating total costs at completion for long-term, fixed-price contracts in the Aerospace & Defense segment[244](index=244&type=chunk)[246](index=246&type=chunk) - KPMG LLP served as the auditor from 1990 to 2021 and issued an unqualified opinion on the FY2021 and FY2020 financial statements[258](index=258&type=chunk)[261](index=261&type=chunk) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial performance and position for FY2020-2022, highlighting strong FY2022 results Consolidated Statements of Operations (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net sales | $857,502 | $715,440 | $730,471 | | Earnings before income tax | $106,435 | $80,671 | $36,406 | | Net earnings from continuing operations | $82,320 | $63,496 | $22,896 | | Diluted EPS from continuing operations | $3.16 | $2.42 | $0.88 | Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2022 | Sep 30, 2021 | | :--- | :--- | :--- | | Total current assets | $572,622 | $466,154 | | Total Assets | $1,654,456 | $1,577,345 | | Total current liabilities | $318,129 | $274,995 | | Total Liabilities | $606,299 | $557,649 | | Total shareholders' equity | $1,048,157 | $1,019,696 | Consolidated Statements of Cash Flows (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $135,275 | $123,139 | $82,280 | | Net cash (used) by investing activities | ($55,919) | ($202,441) | $140,953 | | Net cash (used) provided by financing activities | ($32,122) | $81,473 | ($236,220) | | Net increase (decrease) in cash | $41,492 | $3,672 | ($9,248) | [Notes to Consolidated Financial Statements](index=66&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, acquisitions, goodwill, debt, and share-based compensation, supplementing the financial statements - **Revenue Recognition:** Approximately **60% of A&D revenue** and **75% of Test revenue** is recognized over time, using cost-to-cost and milestone output methods, respectively. This requires significant judgment in estimating costs to completion[298](index=298&type=chunk)[313](index=313&type=chunk) - **Acquisitions:** The company acquired NEco in FY2022 for **$15.4 million**, and Altanova and Phenix in FY2021 for approximately **$115 million** and **$47.2 million**, respectively. These acquisitions added significant goodwill and intangible assets, primarily in the USG segment[351](index=351&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk) - **Goodwill:** As of September 30, 2022, goodwill totaled **$492.7 million**, with the largest portion (**$348.7 million**) allocated to the USG segment. No impairment was recorded in 2022[358](index=358&type=chunk)[361](index=361&type=chunk) - **Debt:** The company has a **$500 million revolving credit facility** maturing in September 2024. As of September 30, 2022, total borrowings were **$153.0 million**, and the company was in compliance with all covenants[372](index=372&type=chunk)[375](index=375&type=chunk) - **Remaining Performance Obligations (Backlog):** At September 30, 2022, the company had **$695.0 million** in remaining performance obligations, with approximately **80%** expected to be recognized as revenue in the next twelve months[421](index=421&type=chunk)