Q3 2024 Performance Highlights - Entered orders increased significantly to $311.7 million, a 46.1% increase compared to $213.3 million in Q3 2023[6,7] - Sales increased to $260.8 million, a 4.8% increase compared to $248.7 million in Q3 2023[6,7] - Adjusted EBIT increased to $41.4 million, an 8.0% increase compared to $38.3 million in Q3 2023[6,7] - Adjusted EPS increased to $1.16, a 6.4% increase compared to $1.09 in Q3 2023[6,7] Segment Performance - A&D (Aerospace & Defense) entered orders increased by 79.3% to $146.9 million compared to $81.9 million in Q3 2023, but Adjusted EBIT decreased by 1.0% to $21.5 million[8,10] - USG (Utility Solutions Group) entered orders increased by 17.0% to $100.0 million compared to $85.5 million in Q3 2023, and Adjusted EBIT increased by 8.5% to $22.2 million[12,13] - Test segment entered orders increased significantly by 41.4% to $64.8 million compared to $45.9 million in Q3 2023, and Adjusted EBIT increased by 7.6% to $9.3 million[16,17] Year-to-Date (YTD) Results - Entered orders increased by 21.7% to $844.5 million compared to $693.8 million in Q3 YTD 2023[18,20] - Sales increased by 6.6% to $728.2 million compared to $683.4 million in Q3 YTD 2023[18,20] - Adjusted EBIT increased by 11.9% to $98.3 million compared to $87.8 million in Q3 YTD 2023[18,20] - Adjusted EPS increased by 11.0% to $2.72 compared to $2.45 in Q3 YTD 2023[19,20] FY'24 Guidance - The company expects sales growth of 7% to 8%, projecting sales in the range of $1.02 billion to $1.03 billion[24] - The company anticipates Q4 2024 Adjusted EPS in the range of $1.38 to $1.48, representing growth of 10% to 18% over the prior year[24] - The company revised its full-year Adjusted EPS guidance to a range of $4.10 to $4.20, representing growth of 11% to 14% over the prior year[24]

St. Louis, Aug. 07, 2024 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the third quarter ended June 30, 2024 (Q3 2024). Operating Highlights Q3 2024 Sales increased $12.1 million (5 percent) to $260.8 million compared to $248.7 million in Q3 2023. Q3 organic sales increased $8.7 million (4 percent) and the MPE acquisition contributed $3.4 million (1 percent) of revenue in the quarter. Q3 2024 GAAP EPS increased 5 percent to $1.13 per s ...

For those unable to participate, a webcast replay will be available after the call in the Investor Center of ESCO's website. ESCO is a global provider of highly engineered products and solutions serving diverse end-markets. It manufactures filtration and fluid control products for the aviation, Navy, space, and process markets worldwide and composite-based products and solutions for Navy, defense, and industrial customers. ESCO is an industry leader in designing and manufacturing RF test and measurement pro ...

Synopsis Historical Financial Analysis ESE's past financial results have demonstrated robust top-line growth. In 2021, it reported total net sales of approximately $715.40 million. In 2022, net sales grew 19.9% year-over-year to $857.5 million. This growth was driven by all three segments, which are Aerospace and Defence [A&D], Utility Solutions Group [USG], and RF Test & Measurement [Test]. Its A&D segment net sales increased 11.6%, which was driven by an increase in commercial aerospace sales as a result ...

St. Louis, June 05, 2024 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) announced today that Chris Tucker, Senior Vice President & CFO, will participate in a fireside chat on Wednesday, June 12, at the Wells Fargo Industrial Conference. The fireside chat webcast will begin at 2:15 Central Time and will be available in the Investor Center on the ESCO website or through this registration link. ESCO is a global provider of highly engineered products and solutions serving diverse end-markets. It manufac ...

St. Louis, June 05, 2024 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) announced today that Chris Tucker, Senior Vice President & CFO, will participate in a fireside chat on Wednesday, June 12, at the Wells Fargo Industrial Conference. The fireside chat webcast will begin at 2:15 Central Time and will be available in the Investor Center on the ESCO website or through this registration link. ESCO is a global provider of highly engineered products and solutions serving diverse end-markets. It manufac ...

PART I. FINANCIAL INFORMATION This section presents the company's condensed consolidated financial statements and management's financial analysis [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the condensed consolidated statements of operations, comprehensive income, balance sheets, and cash flows [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Three Months)](index=2&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20(Three%20Months)) For the three months ended March 31, 2024, ESCO Technologies Inc. reported an increase in net sales, net earnings, and diluted earnings per share compared to the same period in 2023 Operating Results (Three Months) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------- | :------------------------------------------------ | :------------------------------------------------ | :------------------------ | :------------- | | Net sales | $249,129 | $229,136 | $19,993 | 8.7% | | Net earnings | $23,219 | $17,878 | $5,341 | 29.9% | | Diluted - Net earnings (per share) | $0.90 | $0.69 | $0.21 | 30.4% | [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Six Months)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20(Six%20Months)) For the six months ended March 31, 2024, the company demonstrated strong financial performance with increased net sales, net earnings, and diluted earnings per share compared to the prior year period Operating Results (Six Months) | Metric | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------ | :------------- | | Net sales | $467,443 | $434,637 | $32,806 | 7.5% | | Net earnings | $38,388 | $32,605 | $5,783 | 17.7% | | Diluted - Net earnings (per share) | $1.49 | $1.26 | $0.23 | 18.3% | [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Comprehensive income for the three months ended March 31, 2024, decreased compared to the prior year, primarily due to negative foreign currency translation adjustments, while the six-month period saw a decrease as well Comprehensive Income Details | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net earnings | $23,219 | $17,878 | $38,388 | $32,605 | | Foreign currency translation adjustments | (4,745) | 2,233 | 4,669 | 13,747 | | Total other comprehensive income (loss) | (4,745) | 2,233 | 4,669 | 13,747 | | Comprehensive income | $18,474 | $20,111 | $43,057 | $46,352 | [CONDENSED CONSOLIDATED BALANCE SHEETS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2024, ESCO Technologies Inc. reported an increase in total assets and shareholders' equity compared to September 30, 2023, driven by higher cash, inventories, and long-term debt Balance Sheet Summary (Period End) | Metric | March 31, 2024 (in thousands) | September 30, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :-------------------- | :--------- | | Total assets | $1,784,191 | $1,683,214 | $100,977 | 6.0% | | Total liabilities | $617,781 | $552,072 | $65,709 | 11.9% | | Total shareholders' equity | $1,166,410 | $1,131,142 | $35,268 | 3.1% | | Cash and cash equivalents | $59,436 | $41,866 | $17,570 | 42.0% | | Inventories | $211,338 | $184,067 | $27,271 | 14.8% | | Long-term debt | $171,000 | $82,000 | $89,000 | 108.5% | [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended March 31, 2024, the company generated positive cash flow from operating activities, a significant improvement from the prior year, while investing activities increased due to acquisitions and capital expenditures, and financing activities provided substantial cash primarily from debt Cash Flow Summary (Six Months) | Metric | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided (used) by operating activities | $19,237 | $(5,461) | $24,698 | | Net cash used by investing activities | $(78,392) | $(34,124) | $(44,268) | | Net cash provided (used) by financing activities | $76,254 | $(10,719) | $86,973 | | Acquisition of business, net of cash acquired | $(56,179) | $(17,901) | $(38,278) | | Proceeds from long-term debt and short-term borrowings | $154,000 | $68,000 | $86,000 | [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=7&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes on accounting policies, acquisitions, share-based compensation, and other financial statement disclosures [1. BASIS OF PRESENTATION](index=7&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The interim consolidated financial statements are unaudited, prepared in accordance with Form 10-Q, and include normal recurring accruals. They do not contain all disclosures required for annual GAAP statements, and results for the interim period are not necessarily indicative of the full fiscal year - The accompanying consolidated financial statements are unaudited and presented in accordance with Form **10-Q**, thus not including all disclosures required for annual financial statements by GAAP[16](index=16&type=chunk) - Interim results for the three-month period ended March 31, **2024**, are not necessarily indicative of the results for the entire **2024** fiscal year[17](index=17&type=chunk) [2. EARNINGS PER SHARE (EPS)](index=7&type=section&id=2.%20EARNINGS%20PER%20SHARE%20(EPS)) Basic EPS is calculated using the weighted average number of common shares outstanding, while diluted EPS includes the impact of dilutive restricted shares Earnings Per Share Data | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | | :---------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Weighted Average Shares Outstanding — Basic | 25,792 | 25,800 | 25,794 | 25,831 | | Dilutive Restricted Shares | 55 | 95 | 52 | 88 | | Adjusted Shares — Diluted | 25,847 | 25,895 | 25,846 | 25,919 | [3. ACQUISITION](index=7&type=section&id=3.%20ACQUISITION) On November 9, 2023, the Company acquired MPE Limited for approximately $56.2 million, net of cash, integrating it into the Test segment. The acquisition resulted in $30.3 million in goodwill and $31.1 million in identifiable intangible assets, primarily customer relationships - On November 9, **2023**, the Company acquired MPE Limited (MPE), based in the United Kingdom, for approximately **$56.2 million**, net of cash acquired[19](index=19&type=chunk) - MPE is a leading global manufacturer of high-performance EMC/EMP filters and capacitor products for military, utility, telecommunication, and other critical infrastructure applications[19](index=19&type=chunk) - The acquisition resulted in **$30.3 million** of acquired goodwill and **$31.1 million** of identifiable intangible assets, mainly consisting of customer relationships totaling **$29.1 million**[19](index=19&type=chunk) [4. SHARE-BASED COMPENSATION](index=7&type=section&id=4.%20SHARE-BASED%20COMPENSATION) Share-based compensation expense for both performance-accelerated/time-vested restricted stock units and non-employee director grants decreased in the three and six-month periods ended March 31, 2024, compared to the corresponding periods in 2023. As of March 31, 2024, $13.1 million of unrecognized compensation cost remains Share-Based Compensation Expense | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Compensation expense (PARS/RSU/PSU Awards) | $1,700 | $3,100 | $3,500 | $4,700 | | Compensation expense (Non-Employee Directors Plan) | $300 | $300 | $600 | $600 | | Total share-based compensation cost | $2,000 | $3,400 | $4,100 | $5,300 | | Total income tax benefit | $300 | $300 | $500 | $600 | - As of March 31, **2024**, there was **$13.1 million** of total unrecognized compensation cost related to share-based compensation arrangements, expected to be recognized over a remaining weighted-average period of **1.8 years**[23](index=23&type=chunk) [5. INVENTORIES](index=8&type=section&id=5.%20INVENTORIES) Total inventories increased to $211.3 million as of March 31, 2024, from $184.1 million at September 30, 2023, with increases across finished goods, work in process, and raw materials Inventory Breakdown (Period End) | (In thousands) | March 31, 2024 | September 30, 2023 | Change (in thousands) | Change (%) | | :------------- | :------------- | :----------------- | :-------------------- | :--------- | | Finished goods | $38,857 | $34,577 | $4,280 | 12.4% | | Work in process | $54,889 | $42,178 | $12,711 | 30.1% | | Raw materials | $117,592 | $107,312 | $10,280 | 9.6% | | Total inventories | $211,338 | $184,067 | $27,271 | 14.8% | [6. GOODWILL AND OTHER INTANGIBLE ASSETS](index=8&type=section&id=6.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill increased to $535.7 million as of March 31, 2024, primarily due to acquisition activity in the Test segment. Intangible assets with determinable lives, particularly customer relationships, also saw an increase Goodwill and Intangible Assets (Period End) | (Dollars in thousands) | March 31, 2024 | September 30, 2023 | Change (in thousands) | Change (%) | | :--------------------- | :------------- | :----------------- | :-------------------- | :--------- | | Goodwill | $535,661 | $503,177 | $32,484 | 6.5% | | Patents (Net) | $1,229 | $1,298 | $(69) | -5.3% | | Capitalized software (Net) | $41,420 | $41,109 | $311 | 0.8% | | Customer relationships (Net) | $205,153 | $183,616 | $21,537 | 11.7% | | Other (Net) | $4,274 | $4,654 | $(380) | -8.2% | | Trade names (Indefinite lives) | $162,796 | $161,447 | $1,349 | 0.8% | - Goodwill increased by **$30.3 million** due to acquisition activity, specifically in the Test segment, and **$2.2 million** from foreign currency translation for the six months ended March 31, **2024**[26](index=26&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=9&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) The Company operates in three reportable segments: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test). Performance is evaluated based on Net Sales and EBIT, with EBIT being a non-GAAP measure used for operational profitability assessment and resource allocation - The Company classifies its continuing business operations into three reportable segments: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test)[27](index=27&type=chunk) - Management evaluates and measures segment performance based on 'Net Sales' and 'EBIT' (Earnings Before Interest and Taxes)[32](index=32&type=chunk) - EBIT is a non-GAAP financial measure considered useful for assessing operational profitability, resource allocation, and incentive compensation, as it excludes interest and taxes[34](index=34&type=chunk) Segment Performance Data | Segment | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2023 (in thousands) | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | **NET SALES** | | | | | | Aerospace & Defense | $114,701 | $98,982 | $209,434 | $181,965 | | USG | $87,309 | $79,161 | $170,293 | $150,206 | | Test | $47,119 | $50,993 | $87,716 | $102,466 | | Consolidated totals | $249,129 | $229,136 | $467,443 | $434,637 | | **EBIT** | | | | | | Aerospace & Defense | $23,377 | $18,795 | $40,040 | $31,331 | | USG | $17,575 | $14,061 | $35,200 | $30,192 | | Test | $5,542 | $7,226 | $7,321 | $12,637 | | Corporate (loss) | $(14,047) | $(14,463) | $(27,993) | $(27,984) | | Consolidated EBIT | $32,447 | $25,619 | $54,568 | $46,176 | [8. DEBT](index=10&type=section&id=8.%20DEBT) Total borrowings increased to $191.0 million as of March 31, 2024, from $102.0 million at September 30, 2023, primarily under a $500 million revolving credit facility maturing in August 2028. The company had $303 million available to borrow and was in compliance with all covenants Debt Summary (Period End) | (In thousands) | March 31, 2024 | September 30, 2023 | Change (in thousands) | Change (%) | | :------------- | :------------- | :----------------- | :-------------------- | :--------- | | Total borrowings | $191,000 | $102,000 | $89,000 | 87.3% | | Current portion of long-term debt | $(20,000) | $(20,000) | $0 | 0.0% | | Total long-term debt, less current portion | $171,000 | $82,000 | $89,000 | 108.5% | - The Credit Facility includes a **$500 million** revolving line of credit, with provisions for an additional **$250 million** increase, and matures on August 30, **2028**[36](index=36&type=chunk) - As of March 31, **2024**, the Company had approximately **$303 million** available to borrow under the Credit Facility, plus the **$250 million** increase option, in addition to **$59.4 million** cash on hand[37](index=37&type=chunk) - The weighted average interest rates were **6.8%** for both the three and six-month periods ending March 31, **2024**, compared to **6.0%** and **5.3%** for the corresponding periods in **2023**, respectively[38](index=38&type=chunk) [9. INCOME TAX EXPENSE](index=11&type=section&id=9.%20INCOME%20TAX%20EXPENSE) The effective income tax rate decreased to 20.5% for Q2 2024 (from 23.4% in Q2 2023) and 21.1% for the first six months of 2024 (from 22.8% in 2023), favorably impacted by discrete events like foreign valuation allowance release and share-based compensation tax benefits Effective Income Tax Rates | Metric | Q2 2024 | Q2 2023 | 6 Months 2024 | 6 Months 2023 | | :---------------------- | :------ | :------ | :------------ | :------------ | | Effective income tax rate | 20.5% | 23.4% | 21.1% | 22.8% | - Income tax expense in the second quarter and first six months of **2024** was favorably impacted by discrete events including the release of a foreign valuation allowance and excess tax benefit related to the vesting of share-based director compensation[39](index=39&type=chunk) [10. SHAREHOLDERS' EQUITY](index=11&type=section&id=10.%20SHAREHOLDERS'%20EQUITY) Total shareholders' equity increased to $1,166.4 million as of March 31, 2024, from $1,131.1 million at September 30, 2023, driven by net earnings and changes in accumulated other comprehensive loss, partially offset by share repurchases and dividends Shareholders' Equity Details (Period End) | (In thousands) | March 31, 2024 | March 31, 2023 | | :------------- | :------------- | :------------- | | Total equity | $1,166,410 | $1,080,795 | | Retained earnings | $1,023,578 | $933,499 | | Accumulated other comprehensive loss, net of tax | $(19,300) | $(18,018) | | Treasury stock | $(146,241) | $(139,178) | [11. FAIR VALUE MEASUREMENTS](index=11&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENTS) The company estimates the fair value of its financial instruments, classifying forward contracts and interest rate swaps as Level 2 within the valuation hierarchy. Nonfinancial assets are not measured at fair value on a recurring basis, and no impairments were recorded during the reporting periods - The fair value hierarchy for disclosure of fair value measurements includes Level **1** (quoted prices in active markets), Level **2** (observable inputs for similar assets/liabilities), and Level **3** (unobservable inputs)[41](index=41&type=chunk) - The carrying amounts of cash and cash equivalents, receivables, inventories, payables, and other current assets and liabilities approximate fair value due to their short maturity[42](index=42&type=chunk) - The Company's forward contracts and interest rate swaps are classified within Level **2** of the valuation hierarchy and are immaterial[43](index=43&type=chunk) - No impairments were recorded for nonfinancial assets (e.g., property, plant and equipment, other intangible assets) during the three and six-month periods ended March 31, **2024**[44](index=44&type=chunk) [12. REVENUES](index=12&type=section&id=12.%20REVENUES) The company disaggregates revenues by customer type (Commercial, Government), geographic location (United States, International), and revenue recognition method (Point in time, Over time) for its three reportable segments. Remaining performance obligations totaled $837.7 million at March 31, 2024, with 70% expected to be recognized in the next twelve months Revenue Disaggregation (Three Months) | Three months ended March 31, 2024 (In thousands) | Aerospace & Defense | USG | Test | Total | | :----------------------------------------------- | :------------------ | :------- | :------- | :------- | | **Customer type:** | | | | | | Commercial | $49,382 | $85,220 | $34,537 | $169,139 | | Government | $65,319 | $2,089 | $12,582 | $79,990 | | **Geographic location:** | | | | | | United States | $92,161 | $55,763 | $27,543 | $175,467 | | International | $22,540 | $31,546 | $19,576 | $73,662 | | **Revenue recognition method:** | | | | | | Point in time | $53,463 | $70,285 | $10,301 | $134,049 | | Over time | $61,238 | $17,024 | $36,818 | $115,080 | Revenue Disaggregation (Six Months) | Six months ended March 31, 2024 (In thousands) | Aerospace & Defense | USG | Test | Total | | :---------------------------------------------- | :------------------ | :------- | :------- | :------- | | **Customer type:** | | | | | | Commercial | $86,591 | $166,689 | $69,615 | $322,895 | | Government | $122,843 | $3,604 | $18,101 | $144,548 | | **Geographic location:** | | | | | | United States | $172,062 | $111,725 | $49,795 | $333,582 | | International | $37,372 | $58,568 | $37,921 | $133,861 | | **Revenue recognition method:** | | | | | | Point in time | $92,928 | $136,989 | $18,280 | $248,197 | | Over time | $116,506 | $33,304 | $69,436 | $219,246 | - At March 31, **2024**, the Company had **$837.7 million** in remaining performance obligations (backlog), with approximately **70%** expected to be recognized as revenues in the next twelve months[52](index=52&type=chunk) [13. LEASES](index=14&type=section&id=13.%20LEASES) The company recognizes right-of-use (ROU) assets and lease liabilities for leases exceeding 12 months, using its incremental borrowing rate for present value calculations. Total lease costs for the first six months of 2024 were $4.9 million, with operating leases having a weighted-average remaining term of 10.8 years Lease Costs and Terms | (Dollars in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :--------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Finance lease cost | $588 | $626 | $1,204 | $1,255 | | Operating lease cost | $1,874 | $1,853 | $3,738 | $3,498 | | Total lease costs | $2,462 | $2,479 | $4,942 | $4,753 | Lease Costs and Terms (Period End) | Metric | March 31, 2024 | March 31, 2023 | | :-------------------------- | :------------- | :------------- | | Weighted-average remaining lease term (Operating leases) | 10.8 years | 11.5 years | | Weighted-average remaining lease term (Finance leases) | 11.1 years | 11.5 years | | Weighted-average discount rate (Operating leases) | 4.55 % | 4.40 % | | Weighted-average discount rate (Finance leases) | 4.68 % | 4.61 % | [14. NEW ACCOUNTING PRONOUNCEMENTS](index=17&type=section&id=14.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) The FASB issued ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), which will expand disclosure requirements in fiscal years 2025 and 2026, respectively. These pronouncements are not expected to change the company's consolidated financial statements, only requiring additional disclosures - ASU **2023-07**, 'Segment Reporting,' expands annual and interim disclosure requirements for reportable segments, effective for fiscal years beginning after December 15, **2023** (interim periods after December 15, **2024**)[61](index=61&type=chunk) - ASU **2023-09**, 'Income Taxes,' provides qualitative and quantitative updates to rate reconciliation and income taxes paid disclosures, effective for fiscal years beginning after December 15, **2024**[62](index=62&type=chunk) - Management does not expect these new accounting pronouncements to change the consolidated statements of operations, financial position, or cash flows, only requiring additional disclosure[61](index=61&type=chunk)[62](index=62&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=18&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of the company's financial condition, operating results, and liquidity [OVERVIEW](index=18&type=section&id=OVERVIEW) In the second quarter and first six months of fiscal year 2024, ESCO Technologies Inc. achieved significant increases in sales, net earnings, and diluted earnings per share compared to the corresponding periods in 2023 Financial Overview (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Sales | $249.1 | $229.1 | $20.0 | 8.7% | | Net earnings | $23.2 | $17.9 | $5.3 | 29.6% | | Diluted EPS | $0.90 | $0.69 | $0.21 | 30.4% | Financial Overview (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Sales | $467.4 | $434.6 | $32.8 | 7.5% | | Net earnings | $38.4 | $32.6 | $5.8 | 17.8% | | Diluted EPS | $1.49 | $1.26 | $0.23 | 18.3% | [NET SALES](index=18&type=section&id=NET%20SALES) Consolidated net sales increased by 8.7% in Q2 2024 and 7.5% in the first six months of 2024, primarily driven by strong performance in the Aerospace & Defense and USG segments, partially offset by a decrease in the Test segment Net Sales by Segment (Q2) | Segment | Q2 2024 Net Sales (in millions) | Q2 2023 Net Sales (in millions) | YoY Change (in millions) | YoY Change (%) | | :------------------ | :------------------------------ | :------------------------------ | :----------------------- | :------------- | | Aerospace & Defense | $114.7 | $99.0 | $15.7 | 15.9% | | USG | $87.3 | $79.2 | $8.1 | 10.2% | | Test | $47.1 | $51.0 | $(3.9) | -7.6% | | **Consolidated** | **$249.1** | **$229.1** | **$20.0** | **8.7%** | Net Sales by Segment (Six Months) | Segment | 6 Months 2024 Net Sales (in millions) | 6 Months 2023 Net Sales (in millions) | YoY Change (in millions) | YoY Change (%) | | :------------------ | :------------------------------------ | :------------------------------------ | :----------------------- | :------------- | | Aerospace & Defense | $209.4 | $182.0 | $27.4 | 15.1% | | USG | $170.3 | $150.2 | $20.1 | 13.4% | | Test | $87.7 | $102.5 | $(14.8) | -14.4% | | **Consolidated** | **$467.4** | **$434.6** | **$32.8** | **7.5%** | [Aerospace & Defense (A&D) Sales](index=18&type=section&id=Aerospace%20%26%20Defense%20(A%26D)%20Sales) A&D net sales grew by 15.9% in Q2 2024 and 15.1% in the first six months of 2024, primarily driven by increased commercial aerospace, defense aerospace, and navy revenues Aerospace & Defense Net Sales (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | A&D Net Sales | $114.7 | $99.0 | $15.7 | 15.9% | Aerospace & Defense Net Sales (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | A&D Net Sales | $209.4 | $182.0 | $27.4 | 15.1% | - Sales increase in Q2 **2024** was mainly due to a **$5.1 million** increase in commercial aerospace shipments, a **$3.1 million** increase in defense aerospace shipments, and a **$7.1 million** increase in navy revenues[66](index=66&type=chunk) [USG Sales](index=18&type=section&id=USG%20Sales) USG net sales increased by 10.2% in Q2 2024 and 13.4% in the first six months of 2024, driven by higher service revenue, cybersecurity/compliance (DUCe) revenue, and continued strength in the renewables end-market, primarily solar, at NRG USG Net Sales (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | USG Net Sales | $87.3 | $79.2 | $8.1 | 10.2% | USG Net Sales (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | USG Net Sales | $170.3 | $150.2 | $20.1 | 13.4% | - The increase in USG sales was mainly due to an increase in service revenue, cybersecurity/compliance (DUCe) revenue, and an increase in net sales at NRG driven by continued strength in the renewables end-market, primarily solar[67](index=67&type=chunk) [Test Sales](index=18&type=section&id=Test%20Sales) Test segment net sales decreased by 7.6% in Q2 2024 and 14.4% in the first six months of 2024, primarily due to lower wireless, filters, and acoustic volumes in U.S. and European operations, and timing of test and measurement chamber projects Test Segment Net Sales (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Test Net Sales | $47.1 | $51.0 | $(3.9) | -7.6% | Test Segment Net Sales (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Test Net Sales | $87.7 | $102.5 | $(14.8) | -14.4% | - The decrease in Test segment sales was primarily due to lower wireless, filters, and acoustic volumes from the Company's U.S. and European operations, and timing of test and measurement chamber projects[68](index=68&type=chunk) [ORDERS AND BACKLOG](index=18&type=section&id=ORDERS%20AND%20BACKLOG) Backlog increased to $837.7 million at March 31, 2024, from $772.4 million at September 30, 2023. New orders for the first six months of 2024 totaled $532.8 million, up from $480.5 million in the prior year, with Aerospace & Defense contributing the largest share Orders and Backlog Data (Period End) | Metric | March 31, 2024 (in millions) | September 30, 2023 (in millions) | Change (in millions) | Change (%) | | :------- | :--------------------------- | :------------------------------- | :------------------- | :--------- | | Backlog | $837.7 | $772.4 | $65.3 | 8.5% | Orders and Backlog Data (Q2) | Segment | Q2 2024 New Orders (in millions) | Q2 2023 New Orders (in millions) | YoY Change (in millions) | YoY Change (%) | | :------------------ | :------------------------------- | :------------------------------- | :----------------------- | :------------- | | Aerospace & Defense | $116.1 | $111.7 | $4.4 | 3.9% | | USG | $79.0 | $84.6 | $(5.6) | -6.6% | | Test | $43.9 | $55.3 | $(11.4) | -20.6% | | **Total New Orders**| **$239.1** | **$251.6** | **$(12.5)** | **-5.0%** | Orders and Backlog Data (Six Months) | Segment | 6 Months 2024 New Orders (in millions) | 6 Months 2023 New Orders (in millions) | YoY Change (in millions) | YoY Change (%) | | :------------------ | :------------------------------------- | :------------------------------------- | :----------------------- | :------------- | | Aerospace & Defense | $287.7 | $208.9 | $78.8 | 37.7% | | USG | $156.0 | $164.8 | $(8.8) | -5.3% | | Test | $89.1 | $106.8 | $(17.7) | -16.6% | | **Total New Orders**| **$532.8** | **$480.5** | **$52.3** | **10.9%** | [SELLING, GENERAL AND ADMINISTRATIVE EXPENSES](index=20&type=section&id=SELLING%2C%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) Selling, general and administrative (SG&A) expenses increased in Q2 and the first six months of 2024, primarily due to higher sales, inflationary impacts, and acquisition impacts within the USG and A&D segments, though as a percentage of net sales, they decreased SG&A Expenses (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (Q2 2024) | % of Net Sales (Q2 2023) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | :----------------------- | :----------------------- | | SG&A Expenses | $55.1 | $53.9 | $1.2 | 2.2% | 22.1% | 23.5% | SG&A Expenses (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (6 Months 2024) | % of Net Sales (6 Months 2023) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | :------------------------------- | :------------------------------- | | SG&A Expenses | $109.1 | $105.2 | $3.9 | 3.7% | 23.3% | 24.2% | - The increase in SG&A was mainly due to higher sales, inflationary impacts, and acquisition impacts within the USG and A&D segments[73](index=73&type=chunk) [AMORTIZATION OF INTANGIBLE ASSETS](index=20&type=section&id=AMORTIZATION%20OF%20INTANGIBLE%20ASSETS) Amortization of intangible assets increased in Q2 and the first six months of 2024, primarily due to higher amortization of capitalized software and intangible assets related to the MPE and CMT acquisitions Amortization Expense (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Amortization of intangible assets | $8.6 | $7.0 | $1.6 | 22.9% | Amortization Expense (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Amortization of intangible assets | $16.4 | $13.9 | $2.5 | 18.0% | - The increase in amortization expense was mainly due to an increase in amortization of capitalized software and amortization of intangible assets related to the MPE and CMT acquisitions[74](index=74&type=chunk) [OTHER EXPENSES (INCOME), NET](index=20&type=section&id=OTHER%20EXPENSES%20(INCOME)%2C%20NET) Other expenses, net, increased in Q2 and the first six months of 2024, primarily due to approximately $0.5 million in restructuring charges (severance) within the Test and A&D segments Other Expenses (Income) (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Other expenses, net | $0.7 | $0.3 | $0.4 | 133.3% | Other Expenses (Income) (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Other expenses, net | $0.9 | $0.7 | $0.2 | 28.6% | - The principal component of other expenses, net, in Q2 and the first six months of **2024** was approximately **$0.5 million** of restructuring charges (primarily severance) within the Test and A&D segments[75](index=75&type=chunk) [EBIT](index=20&type=section&id=EBIT) Consolidated EBIT increased to $32.4 million (13.0% of net sales) in Q2 2024 and $54.6 million (11.7% of net sales) for the first six months of 2024, reflecting improved operational profitability across most segments EBIT by Segment (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (Q2 2024) | % of Net Sales (Q2 2023) | | :------------------ | :-------------------- | :-------------------- | :----------------------- | :------------- | :----------------------- | :----------------------- | | Consolidated EBIT | $32.4 | $25.6 | $6.8 | 26.6% | 13.0% | 11.2% | EBIT by Segment (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (6 Months 2024) | % of Net Sales (6 Months 2023) | | :------------------ | :-------------------------- | :-------------------------- | :----------------------- | :------------- | :------------------------------- | :------------------------------- | | Consolidated EBIT | $54.6 | $46.2 | $8.4 | 18.2% | 11.7% | 10.6% | [Aerospace & Defense EBIT](index=20&type=section&id=Aerospace%20%26%20Defense%20EBIT) A&D EBIT increased in Q2 and the first six months of 2024, driven by leverage on higher sales volumes and price increases, despite inflationary pressures and restructuring charges Aerospace & Defense EBIT Performance (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (Q2 2024) | % of Net Sales (Q2 2023) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | :----------------------- | :----------------------- | | A&D EBIT | $23.4 | $18.8 | $4.6 | 24.5% | 20.4% | 19.0% | Aerospace & Defense EBIT Performance (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (6 Months 2024) | % of Net Sales (6 Months 2023) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | :------------------------------- | :------------------------------- | | A&D EBIT | $40.0 | $31.3 | $8.7 | 27.8% | 19.1% | 17.2% | - The increase in A&D EBIT was mainly driven by leverage on higher sales volumes and price increases, partially offset by inflationary pressures and mix. EBIT was negatively impacted by **$0.3 million** of restructuring charges in both periods[79](index=79&type=chunk) [USG EBIT](index=22&type=section&id=USG%20EBIT) USG EBIT increased in Q2 and the first six months of 2024, primarily due to leverage on higher sales volumes at Doble and NRG, price increases, and favorable mix, partially offset by inflationary pressures USG EBIT Performance (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (Q2 2024) | % of Net Sales (Q2 2023) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | :----------------------- | :----------------------- | | USG EBIT | $17.6 | $14.1 | $3.5 | 24.8% | 20.2% | 17.8% | USG EBIT Performance (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (6 Months 2024) | % of Net Sales (6 Months 2023) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | :------------------------------- | :------------------------------- | | USG EBIT | $35.2 | $30.2 | $5.0 | 16.6% | 20.7% | 20.1% | - The increase in USG EBIT was mainly due to leverage on higher sales volumes at Doble and NRG, price increases, and mix, partially offset by inflationary pressures[82](index=82&type=chunk) [Test EBIT](index=22&type=section&id=Test%20EBIT) Test segment EBIT decreased in Q2 and the first six months of 2024, mainly due to lower sales volumes in U.S. and European operations, inflationary pressures, and restructuring charges, partially offset by price increases and cost reduction actions Test Segment EBIT Performance (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (Q2 2024) | % of Net Sales (Q2 2023) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | :----------------------- | :----------------------- | | Test EBIT | $5.5 | $7.2 | $(1.7) | -23.6% | 11.7% | 14.2% | Test Segment EBIT Performance (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | % of Net Sales (6 Months 2024) | % of Net Sales (6 Months 2023) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | :------------------------------- | :------------------------------- | | Test EBIT | $7.3 | $12.6 | $(5.3) | -42.1% | 8.3% | 12.3% | - The decrease in Test EBIT was primarily due to lower sales volumes from the segment's U.S. and European operations and inflationary pressures, partially offset by price increases and cost reduction actions[83](index=83&type=chunk) - EBIT was negatively impacted by **$0.2 million** of restructuring charges in Q2 **2024**, and **$0.3 million** of inventory step-up charges and **$0.2 million** of restructuring charges in the first six months of **2024**[83](index=83&type=chunk) [Corporate EBIT](index=22&type=section&id=Corporate%20EBIT) Corporate costs included in EBIT decreased in Q2 2024 due to lower executive management transition costs compared to the prior year, remaining stable for the six-month period Corporate EBIT (Loss) (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Corporate (loss) | $(14.0) | $(14.5) | $0.5 | -3.4% | Corporate EBIT (Loss) (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Corporate (loss) | $(28.0) | $(28.0) | $0.0 | 0.0% | - The decrease in Corporate costs in Q2 **2024** was mainly due to executive management transition costs incurred in the prior year period[84](index=84&type=chunk) [INTEREST EXPENSE, NET](index=22&type=section&id=INTEREST%20EXPENSE%2C%20NET) Interest expense, net, increased in Q2 and the first six months of 2024 due to higher average interest rates and increased average outstanding borrowings Interest Expense, Net (Q2) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :----------------------- | :------------- | | Interest expense, net | $3.2 | $2.3 | $0.9 | 39.1% | Interest Expense, Net (Six Months) | Metric | 6 Months 2024 (in millions) | 6 Months 2023 (in millions) | YoY Change (in millions) | YoY Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------- | :------------- | | Interest expense, net | $5.9 | $3.9 | $2.0 | 51.3% | - The increase in interest expense was mainly due to higher average interest rates (**6.8%** in **2024** vs. **6.0%** in Q2 **2023** and **6.8%** in **2024** vs. **6.3%** in **6** Months **2023**) and higher average outstanding borrowings[85](index=85&type=chunk) [INCOME TAX EXPENSE](index=22&type=section&id=INCOME%20TAX%20EXPENSE) The effective income tax rate decreased in Q2 and the first six months of 2024, favorably impacted by discrete events such as the release of a foreign valuation allowance and excess tax benefits from share-based compensation Effective Income Tax Rates | Metric | Q2 2024 | Q2 2023 | 6 Months 2024 | 6 Months 2023 | | :---------------------- | :------ | :------ | :------------ | :------------ | | Effective income tax rate | 20.5% | 23.4% | 21.1% | 22.8% | - Income tax expense was favorably impacted by discrete events including the release of a foreign valuation allowance and excess tax benefit related to the vesting of share-based director compensation[86](index=86&type=chunk) [CAPITAL RESOURCES AND LIQUIDITY](index=22&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) The company maintains a strong financial position and liquidity, with working capital increasing to $333.0 million. Net cash provided by operating activities significantly improved, while capital expenditures and acquisitions increased, supported by a robust credit facility - Working capital increased to **$333.0 million** at March 31, **2024**, from **$266.4 million** at September 30, **2023**[87](index=87&type=chunk) - Net cash provided by operating activities was **$19.2 million** in the first six months of **2024**, a significant increase from a net use of (**$5.5**) million in the prior year period, mainly driven by lower accounts receivable balances due to increased collections and higher earnings[88](index=88&type=chunk) - Capital expenditures increased to **$16.3 million** in the first six months of **2024** from **$10.3 million** in **2023**, primarily due to building improvements and machinery & equipment within the A&D segment[89](index=89&type=chunk) [Acquisition (MPE)](index=24&type=section&id=Acquisition%20(MPE)) The acquisition of MPE Limited for approximately $56.2 million, net of cash acquired, on November 9, 2023, was a key investing activity, integrating into the Test segment - On November 9, **2023**, the Company acquired MPE Limited (MPE) for approximately **$56.2 million**, net of cash acquired, with its operating results included as part of ETS-Lindgren in the Test segment[90](index=90&type=chunk) [Credit Facility](index=24&type=section&id=Credit%20Facility) The company has a $500 million revolving credit facility, with $303 million available to borrow and an additional $250 million increase option, alongside $59.4 million cash on hand, ensuring sufficient liquidity for capital requirements and operational needs - At March 31, **2024**, the Company had approximately **$303 million** available to borrow under its bank credit facility, a **$250 million** increase option, and **$59.4 million** cash on hand[91](index=91&type=chunk) - The Company had **$191 million** of outstanding borrowings under the credit facility at March 31, **2024**[91](index=91&type=chunk) [Share Repurchases](index=24&type=section&id=Share%20Repurchases) During the first six months of 2024, the company repurchased approximately 72,000 shares for $7.2 million under a $200 million program, with $160.4 million remaining available for repurchase - During the first six months of **2024**, the Company repurchased approximately **72,000** shares for approximately **$7.2 million**[92](index=92&type=chunk) [Dividends](index=24&type=section&id=Dividends) The company paid quarterly dividends of $0.08 per share, totaling $2.1 million each, in October 2023, January 2024, and April 2024 - A dividend of **$0.08** per share, totaling **$2.1 million**, was paid on October 17, **2023**, January 19, **2024**, and April 16, **2024**[93](index=93&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=24&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Management believes its accounting policies are reasonable and appropriate, requiring significant judgment and estimates based on historical experience, industry trends, and external information, as detailed in the Company's Annual Report on Form 10-K - Management believes the accounting policies used are reasonable and appropriate, requiring significant judgment in selecting assumptions for financial estimates[94](index=94&type=chunk) - Judgments are based on historical experience, industry trends, information from customers, and other outside sources[94](index=94&type=chunk) [OTHER MATTERS (Contingencies)](index=24&type=section&id=OTHER%20MATTERS%20(Contingencies)) The company is involved in various claims, charges, litigation, and environmental remediation efforts. Management believes the aggregate costs for these matters are adequately reserved, covered by insurance, or would not have a material adverse effect on the company's financial results or competitive position - The Company is involved in various claims, charges, litigation, and environmental remediation relating to its business[95](index=95&type=chunk) - Management believes the aggregate costs involved in the resolution of these matters are adequately reserved, covered by insurance, or would not have a material adverse effect on the Company's results from operations, capital expenditures, or competitive position[95](index=95&type=chunk) [FORWARD LOOKING STATEMENTS](index=24&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This report contains forward-looking statements regarding future events and results, which are subject to various risks and uncertainties detailed in the company's 10-K and other factors. The company undertakes no duty to update these statements except as required by applicable laws or regulations - Statements in this Form **10-Q** regarding future events and the Company's future results are considered 'forward-looking statements' under Federal securities laws[96](index=96&type=chunk) - Investors are cautioned that such statements are only predictions and actual results may differ materially due to risks and uncertainties described in Item **1A**, 'Risk Factors,' of the Company's Annual Report on Form **10-K** and other factors[98](index=98&type=chunk) - The Company undertakes no duty to update forward-looking statements except as may be required by applicable laws or regulations[98](index=98&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=27&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 it manages using derivative financial instruments like forward contracts and swaps - Market risks primarily result from changes in interest rates and foreign currency exchange rates[100](index=100&type=chunk) - The Company selectively uses derivative financial instruments, including forward contracts and swaps, to manage these market risks[100](index=100&type=chunk) - There has been no material change to the Company's market risks since September 30, **2023**[100](index=100&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=27&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024. Furthermore, there have been no material changes to the company's internal control over financial reporting during the period covered by this report - The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, **2024**[101](index=101&type=chunk) - There has been no material change in the Company's internal control over financial reporting during the period covered by this report[101](index=101&type=chunk) PART II. OTHER INFORMATION This section includes disclosures on unregistered sales of equity securities, use of proceeds, and a list of exhibits filed with the Form 10-Q [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first three months of 2024, the company repurchased 72,344 shares of common stock for approximately $7.2 million under a $200 million program, with $160.4 million remaining available for repurchase Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | January 1-31, 2024 | 6,901 | $99.90 | 6,901 | $166.9 million | | February 1-29, 2024 | 20,072 | $98.86 | 20,072 | $164.9 million | | March 1-31, 2024 | 45,371 | $99.50 | 45,371 | $160.4 million | | **Total** | **72,344** | **$99.37** | **72,344** | **$160.4 million** | - The share repurchase program, approved on August 5, **2021**, authorizes repurchases up to **$200 million** and is scheduled to expire September 30, **2024**[103](index=103&type=chunk) [ITEM 6. EXHIBITS](index=28&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, share award agreements, certifications, and XBRL financial data - The exhibits include Restated Articles of Incorporation, Amended Certificate of Designation, Articles of Merger, Amendment of Articles of Incorporation, Bylaws, Amended and Restated Credit Agreement, Form of Director Share Award Agreement, Certifications of CEO and CFO, and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[104](index=104&type=chunk) [SIGNATURE](index=29&type=section&id=SIGNATURE) The report is officially signed on behalf of ESCO Technologies Inc. by Christopher L. Tucker, Senior Vice President and Chief Financial Officer, on May 10, 2024 - The report was signed by Christopher L. Tucker, Senior Vice President and Chief Financial Officer of ESCO Technologies Inc., on May 10, **2024**[108](index=108&type=chunk)

NEWS FROM Exhibit 99.1 For more information contact: Kate Lowrey - VP of Investor Relations (314) 213-7277 / klowrey@escotechnologies.com ESCO REPORTS SECOND QUARTER FISCAL 2024 RESULTS - Q2 Sales increase 9% to $249 Million - - Q2 GAAP EPS increases 30% to $0.90 - - Q2 Adjusted EPS increases 24% to $0.94 - ST. LOUIS, May 9, 2024 – ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the second quarter ended March 31, 2024 (Q2 2024). Operating Highlights Bryan S ...

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 ...

Financial Data and Key Metrics Changes - Sales grew by 6% in Q1 2024, with adjusted EBIT up 8% [14][29] - Adjusted earnings per share increased by 3% in the quarter [29] - Cash flow swung to a positive $9 million from a cash use of $9 million in the same quarter last year [26] Business Line Data and Key Metrics Changes - Aerospace & Defense segment saw double-digit sales growth, with a book-to-bill ratio of 1.8, leading to a backlog of over $560 million [22][23] - Utility Solutions Group experienced a decline in orders but is starting to see increasing order pipeline activity [24] - Test business faced a 12% decrease in orders and a 21% reduction in sales, primarily due to project delays [25][30] Market Data and Key Metrics Changes - Overall orders increased by 28%, resulting in a record backlog of $848 million [22] - The commercial and defense aerospace markets showed strong performance, contributing to the sales growth [30] Company Strategy and Development Direction - The company is focused on margin improvement and restructuring actions in the Test business to enhance long-term profitability [21][60] - Continued integration of the MPE acquisition is progressing well, with no surprises reported [78] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year commitments and delivering another record year [13][28] - The company anticipates a growth range of 11% to 13% for the Aerospace & Defense group, up from the previous 8% to 10% [27][34] Other Important Information - The company is experiencing project construction delays primarily in the U.S., impacting revenue recognition [20][56] - The Doble Conference is expected to return to pre-pandemic attendance levels, with excitement around product development [77] Q&A Session Summary Question: Insights on Aerospace & Defense revenue growth guidance - Management expects consistent growth throughout the year, with commercial and defense aerospace leading the growth [42][43] Question: Impact of 737 MAX issues on revenue outlook - No significant revenue risk from 737 MAX issues is anticipated for FY '24, with production rates expected to remain stable [44][45] Question: Confidence in Utility Solutions Group growth despite order softness - Management is optimistic about achieving growth due to recovering orders from key customers [50][53] Question: Reasons for restructuring in the Test business - Restructuring is necessary due to delays in project execution, not a lack of orders, with targeted savings of $2 million to $2.5 million for the year [56][60] Question: Liquidation schedule for Virginia orders - Orders from the Virginia Class submarine program will start flowing into revenue this year, with a boost expected in FY '25 and '26 [63][64] Question: Broader supply chain issues affecting the company - Supply chain challenges persist, particularly with lower-tier suppliers, impacting production capabilities [66] Question: Magnitude of delayed revenue from the Test business - Approximately $10 million to $15 million in revenue has been pushed out to FY '25 due to project delays [68][70]