PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's analysis of its financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Contains the unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and related notes [Condensed Consolidated Statements of Operations](index=2&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Details the company's revenues, expenses, and net earnings for the first quarter of fiscal years 2024 and 2023 Condensed Consolidated Statements of Operations (Three Months Ended December 31) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $218,314 | $205,501 | $12,813 | 6.2% | | Total costs and expenses | $198,860 | $186,602 | $12,258 | 6.6% | | Earnings before income taxes | $19,454 | $18,899 | $555 | 2.9% | | Income tax expense | $4,285 | $4,172 | $113 | 2.7% | | Net earnings | $15,169 | $14,727 | $442 | 3.0% | | Basic EPS | $0.59 | $0.57 | $0.02 | 3.5% | | Diluted EPS | $0.59 | $0.57 | $0.02 | 3.5% | [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Reports net earnings and other comprehensive income, such as foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Three Months Ended December 31) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net earnings | $15,169 | $14,727 | $442 | 3.0% | | Foreign currency translation adjustments | $9,414 | $11,513 | $(2,099) | -18.2% | | Total other comprehensive income (loss) | $9,414 | $11,513 | $(2,099) | -18.2% | | Comprehensive income | $24,583 | $26,240 | $(1,657) | -6.3% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Outlines the company's assets, liabilities, and shareholders' equity at the end of the reporting period Condensed Consolidated Balance Sheets (As of December 31, 2023 vs. September 30, 2023) | Metric | Dec 31, 2023 | Sep 30, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total current assets | $603,202 | $581,095 | $22,107 | 3.8% | | Property, plant and equipment, net | $159,262 | $155,484 | $3,778 | 2.4% | | Intangible assets, net | $422,053 | $392,124 | $29,929 | 7.6% | | Goodwill | $537,601 | $503,177 | $34,424 | 6.8% | | Total assets | $1,772,526 | $1,683,214 | $89,312 | 5.3% | | Total current liabilities | $304,693 | $314,651 | $(9,958) | -3.2% | | Long-term debt | $152,000 | $82,000 | $70,000 | 85.4% | | Total liabilities | $618,432 | $552,072 | $66,360 | 12.0% | | Total shareholders' equity | $1,154,094 | $1,131,142 | $22,952 | 2.0% | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended December 31) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | | :--- | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $8,746 | $(9,008) | $17,754 | | Net cash used by investing activities | $(66,969) | $(7,586) | $(59,383) | | Net cash provided (used) by financing activities | $66,504 | $(29,626) | $96,130 | | Net increase (decrease) in cash and cash equivalents | $9,530 | $(45,802) | $55,332 | | Cash and cash equivalents, end of period | $51,396 | $51,922 | $(526) | - Acquisition of business, net of cash acquired, was a significant investing activity at **$(56.179) million** in Q1 2024, compared to none in Q1 2023[12](index=12&type=chunk) - Proceeds from long-term debt and short-term borrowings increased significantly to **$99.0 million** in Q1 2024 from $17.0 million in Q1 2023[12](index=12&type=chunk) [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=6&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed disclosures and explanations for the line items presented in the primary financial statements [1. BASIS OF PRESENTATION](index=6&type=section&id=1.%20BASIS%20OF%20PRESENTATION) Explains that the interim financial statements are unaudited and do not include all annual GAAP disclosures - Interim financial statements are **unaudited** and prepared per Form 10-Q, not full GAAP annual disclosures[14](index=14&type=chunk) - Results for the three-month period ended December 31, 2023, are **not necessarily indicative** of the full fiscal year 2024[15](index=15&type=chunk) [2. EARNINGS PER SHARE (EPS)](index=6&type=section&id=2.%20EARNINGS%20PER%20SHARE%20(EPS)) Details the calculation of basic and diluted earnings per share, including weighted average shares outstanding Weighted Average Shares Outstanding for EPS Calculation (in thousands) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | | :--- | :--- | :--- | | Weighted Average Shares Outstanding — Basic | 25,797 | 25,863 | | Dilutive Restricted Shares | 49 | 80 | | Adjusted Shares — Diluted | 25,846 | 25,943 | [3. ACQUISITION](index=6&type=section&id=3.%20ACQUISITION) Describes the acquisition of MPE Limited, its business focus, and its integration into the Test segment - Acquired MPE Limited on November 9, 2023, for approximately **$56.2 million** (net of cash acquired)[17](index=17&type=chunk) - MPE is a leading global manufacturer of high-performance EMC/EMP filters and capacitor products for military, utility, telecommunication, and other critical infrastructure applications[17](index=17&type=chunk) - MPE's operating results are included as part of ETS-Lindgren in the **Test segment** since the acquisition date[17](index=17&type=chunk) [4. SHARE-BASED COMPENSATION](index=6&type=section&id=4.%20SHARE-BASED%20COMPENSATION) Outlines the costs associated with share-based compensation plans for employees and non-employee directors Share-Based Compensation Expense (Three Months Ended December 31) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Performance-Accelerated/Time-Vested RSU/PSU Awards Expense | $1.9 million | $1.6 million | $0.3 million | 18.8% | | Non-Employee Directors Plan Expense | $0.3 million | $0.3 million | $0.0 million | 0.0% | | Total share-based compensation cost (SG&A) | $2.2 million | $1.9 million | $0.3 million | 15.8% | | Total income tax benefit | $0.2 million | $0.1 million | $0.1 million | 100.0% | - As of December 31, 2023, **$15.5 million** of total unrecognized compensation cost related to share-based arrangements is expected to be recognized over a remaining weighted-average period of **2.0 years**[21](index=21&type=chunk) [5. INVENTORIES](index=7&type=section&id=5.%20INVENTORIES) Presents the breakdown of inventory balances, including finished goods, work in process, and raw materials Inventories (in thousands) | (In thousands) | Dec 31, 2023 | Sep 30, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finished goods | $37,996 | $34,577 | $3,419 | 9.9% | | Work in process | $54,656 | $42,178 | $12,478 | 29.6% | | Raw materials | $109,925 | $107,312 | $2,613 | 2.4% | | Total inventories | $202,577 | $184,067 | $18,510 | 10.1% | [6. GOODWILL AND OTHER INTANGIBLE ASSETS](index=7&type=section&id=6.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Details the composition and changes in goodwill and other intangible assets, such as patents and customer relationships Goodwill and Intangible Assets (in thousands) | (Dollars in thousands) | Dec 31, 2023 | Sep 30, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Goodwill | $537,601 | $503,177 | $34,424 | 6.8% | | Intangible assets, net: | | | | | | Patents | $1,264 | $1,298 | $(34) | -2.6% | | Capitalized software | $41,528 | $41,109 | $419 | 1.0% | | Customer relationships | $210,869 | $183,616 | $27,253 | 14.8% | | Other | $5,183 | $4,654 | $529 | 11.4% | | Trade names (indefinite lives) | $163,209 | $161,447 | $1,762 | 1.1% | - Goodwill increased by **$34.4 million**, with **$30.3 million** from acquisition activity (MPE) and **$4.1 million** from foreign currency translation[24](index=24&type=chunk) [7. BUSINESS SEGMENT INFORMATION](index=8&type=section&id=7.%20BUSINESS%20SEGMENT%20INFORMATION) Provides a breakdown of net sales and EBIT for the company's three reportable operating segments - Company operates in three reportable segments: **Aerospace & Defense (A&D)**, **Utility Solutions Group (USG)**, and **RF Test & Measurement (Test)**[25](index=25&type=chunk) Net Sales and EBIT by Business Segment (Three Months Ended December 31, in thousands) | (In thousands) | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **NET SALES** | | | | | | Aerospace & Defense | $94,733 | $82,983 | $11,750 | 14.2% | | USG | $82,984 | $71,045 | $11,939 | 16.8% | | Test | $40,597 | $51,473 | $(10,876) | -21.1% | | Consolidated totals | $218,314 | $205,501 | $12,813 | 6.2% | | **EBIT** | | | | | | Aerospace & Defense | $16,663 | $12,536 | $4,127 | 32.9% | | USG | $17,625 | $16,131 | $1,494 | 9.3% | | Test | $1,779 | $5,411 | $(3,632) | -67.1% | | Corporate (loss) | $(13,946) | $(13,521) | $(425) | 3.1% | | Consolidated EBIT | $22,121 | $20,557 | $1,564 | 7.6% | - **EBIT** (Earnings Before Interest and Taxes) is a non-GAAP financial measure used by management to assess operational profitability, resource allocation, and incentive compensation[31](index=31&type=chunk) [8. DEBT](index=9&type=section&id=8.%20DEBT) Summarizes the company's debt structure, available credit, interest rates, and covenant compliance Debt Summary (in thousands) | (In thousands) | Dec 31, 2023 | Sep 30, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total borrowings | $172,000 | $102,000 | $70,000 | 68.6% | | Current portion of long-term debt | $(20,000) | $(20,000) | $0 | 0.0% | | Total long-term debt, less current portion | $152,000 | $82,000 | $70,000 | 85.4% | - The Credit Facility includes a **$500 million** revolving line of credit with an option to increase by an additional **$250 million**, maturing August 30, 2028[33](index=33&type=chunk) - As of December 31, 2023, the company had approximately **$322 million** available to borrow under the Credit Facility, plus the **$250 million** increase option, and **$51.4 million** cash on hand[34](index=34&type=chunk) - Weighted average interest rates were **6.8%** for Q1 2024, up from **4.6%** in Q1 2023; the company was in compliance with all debt covenants[35](index=35&type=chunk) [9. INCOME TAX EXPENSE](index=10&type=section&id=9.%20INCOME%20TAX%20EXPENSE) Reports the effective income tax rate for the current and prior-year periods - The effective income tax rate was **22.0%** in Q1 2024, consistent with **22.1%** in Q1 2023, with no significant changes between periods[36](index=36&type=chunk) [10. SHAREHOLDERS' EQUITY](index=10&type=section&id=10.%20SHAREHOLDERS'%20EQUITY) Presents the components and changes in shareholders' equity, including retained earnings and treasury stock Shareholders' Equity (in thousands) | (In thousands) | Dec 31, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Common stock (ending balance) | $308 | $307 | $1 | 0.3% | | Additional paid-in-capital (ending balance) | $305,283 | $300,697 | $4,586 | 1.5% | | Retained earnings (ending balance) | $1,002,420 | $917,682 | $84,738 | 9.2% | | Accumulated other comprehensive income (loss) (ending balance) | $(14,555) | $(20,251) | $5,696 | -28.1% | | Treasury stock (ending balance) | $(139,362) | $(132,037) | $(7,325) | 5.5% | | Total equity | $1,154,094 | $1,066,398 | $87,696 | 8.2% | - Foreign currency translation adjustments contributed **$9.4 million** to accumulated other comprehensive income (loss) in Q1 2024[37](index=37&type=chunk) [11. FAIR VALUE MEASUREMENTS](index=10&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENTS) Describes the methodology for measuring fair value and confirms the valuation of financial and nonfinancial assets - Fair value measurements are categorized into a three-level hierarchy (Level 1, 2, 3) based on the transparency of inputs to the valuation[38](index=38&type=chunk)[39](index=39&type=chunk) - The carrying amounts of cash, receivables, inventories, payables, and other current assets and liabilities approximate fair value due to their short maturity[40](index=40&type=chunk) - **No impairments** were recorded for nonfinancial assets (property, plant, equipment, other intangible assets) during the three-month period ended December 31, 2023[42](index=42&type=chunk) [12. REVENUES](index=11&type=section&id=12.%20REVENUES) Provides a disaggregation of revenue by customer type, geographic location, and recognition method Disaggregation of Revenues (Three Months Ended December 31, in thousands) | (In thousands) | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Customer type:** | | | | | | Commercial | $153,765 | $152,894 | $871 | 0.6% | | Government | $64,549 | $52,607 | $11,942 | 22.7% | | Total revenues | $218,314 | $205,501 | $12,813 | 6.2% | | **Geographic location:** | | | | | | United States | $158,114 | $142,816 | $15,298 | 10.7% | | International | $60,200 | $62,685 | $(2,485) | -4.0% | | Total revenues | $218,314 | $205,501 | $12,813 | 6.2% | | **Revenue recognition method:** | | | | | | Point in time | $114,148 | $98,736 | $15,412 | 15.6% | | Over time | $104,166 | $106,765 | $(2,599) | -2.4% | | Total revenues | $218,314 | $205,501 | $12,813 | 6.2% | - Remaining performance obligations (backlog) totaled **$847.8 million** at December 31, 2023, with approximately **66%** expected to be recognized as revenue in the next twelve months[49](index=49&type=chunk) - Contract assets, contract liabilities, and accounts receivable totaled **$138.4 million**, **$131.9 million**, and **$194.4 million**, respectively, at December 31, 2023[50](index=50&type=chunk) [13. LEASES](index=13&type=section&id=13.%20LEASES) Discloses information about the company's operating and finance leases, including costs and lease terms - The company recognizes Right-of-Use (ROU) assets and lease liabilities based on the present value of future lease payments, excluding leases with terms of 12 months or less[51](index=51&type=chunk) Lease Costs (Three Months Ended December 31, in thousands) | (Dollars in thousands) | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finance lease cost | $616 | $629 | $(13) | -2.1% | | Operating lease cost | $1,864 | $1,645 | $219 | 13.3% | | Total lease costs | $2,480 | $2,274 | $206 | 9.1% | - Weighted-average remaining lease terms for operating and finance leases were both approximately **11.1 years** as of December 31, 2023[54](index=54&type=chunk) [14. RECENT ACCOUNTING PRONOUNCEMENTS](index=14&type=section&id=14.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) Discusses recently issued accounting standards and their potential impact on the company's financial statements - FASB issued ASU 2023-07 (Segment Reporting) effective for fiscal years beginning after December 15, 2023, expanding annual and interim disclosure requirements for reportable segments[56](index=56&type=chunk) - FASB issued ASU 2023-09 (Income Taxes) effective for fiscal years beginning after December 15, 2024, providing updates to rate reconciliation and income taxes paid disclosures[57](index=57&type=chunk) - Management expects these ASUs to result in additional disclosures but **no changes** to consolidated statements of operations, financial position, or cash flows[56](index=56&type=chunk)[57](index=57&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=15&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides management's perspective on financial performance, liquidity, and capital resources for the first quarter of fiscal 2024 [OVERVIEW](index=15&type=section&id=OVERVIEW) Presents a high-level summary of the company's financial performance for the first quarter of fiscal year 2024 Q1 2024 Financial Performance Overview (in millions, except EPS) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales | $218.3 million | $205.5 million | $12.8 million | 6.2% | | Net earnings | $15.2 million | $14.7 million | $0.5 million | 3.4% | | Diluted EPS | $0.59 | $0.57 | $0.02 | 3.5% | [NET SALES](index=15&type=section&id=NET%20SALES) Analyzes the changes in net sales, detailing performance drivers across the company's business segments - Net sales increased by **$12.8 million**, or **6.2%**, to $218.3 million in the first quarter of 2024[60](index=60&type=chunk) - The increase was driven by a **$12.0 million** increase in the USG segment and an **$11.7 million** increase in the Aerospace & Defense segment[60](index=60&type=chunk) - This growth was partially offset by a **$10.9 million** decrease in the Test segment[60](index=60&type=chunk) [Aerospace & Defense (A&D) Sales](index=15&type=section&id=Aerospace%20&%20Defense%20(A&D)%20Sales) Details the sales performance of the Aerospace & Defense segment, highlighting key product and acquisition contributions - A&D net sales increased by **$11.7 million (14.1%)** to $94.7 million in Q1 2024[61](index=61&type=chunk) - The increase was primarily due to approximately **$7.0 million** higher aerospace shipments at Mayday, Crissair, and PTI, and a **$4.7 million** increase at Globe driven mainly by the CMT acquisition[61](index=61&type=chunk) [USG Sales](index=15&type=section&id=USG%20Sales) Details the sales performance of the Utility Solutions Group segment, driven by offline testing and renewables markets - USG net sales increased by **$12.0 million (16.9%)** to $83.0 million in Q1 2024[62](index=62&type=chunk) - The increase was mainly due to a **$7.6 million** increase at Doble from higher sales of offline testing products and services, and a **$4.4 million** increase at NRG driven by continued strength in the renewables end-market[62](index=62&type=chunk) [Test Sales](index=15&type=section&id=Test%20Sales) Details the sales performance of the Test segment, which saw a decline due to the timing of chamber projects - Test segment net sales decreased by **$10.9 million (21.2%)** to $40.6 million in Q1 2024[63](index=63&type=chunk) - The decrease was primarily due to **$7.5 million** of lower sales from the segment's U.S. operations and **$3.4 million** of lower sales from Asian and European operations, all attributed to the timing of test and measurement chamber projects[63](index=63&type=chunk) [ORDERS AND BACKLOG](index=15&type=section&id=ORDERS%20AND%20BACKLOG) Reports on new orders received during the quarter and the resulting total backlog at period-end Orders and Backlog (in millions) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | New orders received | $293.7 million | $228.9 million | $64.8 million | 28.3% | | Backlog (Dec 31, 2023 / Sep 30, 2023) | $847.8 million | $772.4 million | $75.4 million | 9.8% | - Of the new orders received in Q1 2024, **$171.5 million** related to Aerospace & Defense, **$77.0 million** to USG, and **$45.2 million** to Test products[64](index=64&type=chunk) [SELLING, GENERAL AND ADMINISTRATIVE EXPENSES](index=15&type=section&id=SELLING,%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) Analyzes the change in SG&A expenses, attributing the increase to higher sales and acquisition impacts Selling, General and Administrative Expenses (SG&A) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | SG&A expenses | $54.0 million | $51.3 million | $2.7 million | 5.3% | | SG&A as % of net sales | 24.7% | 25.0% | -0.3% pts | | - The increase in SG&A was mainly due to higher sales, inflationary impacts, and acquisition impacts within the USG and A&D segments[65](index=65&type=chunk) [AMORTIZATION OF INTANGIBLE ASSETS](index=15&type=section&id=AMORTIZATION%20OF%20INTANGIBLE%20ASSETS) Explains the increase in amortization expense, primarily due to capitalized software and recent acquisitions Amortization of Intangible Assets | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Amortization of intangible assets | $7.9 million | $6.9 million | $1.0 million | 14.5% | - The increase was mainly due to an increase in amortization of capitalized software and amortization of intangible assets related to the MPE and CMT acquisitions[67](index=67&type=chunk) [OTHER EXPENSES, NET](index=17&type=section&id=OTHER%20EXPENSES,%20NET) Discusses the components of other net expenses, noting the absence of prior-year restructuring charges Other Expenses, Net | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other expenses, net | $0.2 million | $0.4 million | $(0.2) million | -50.0% | - The principal component of other expenses, net, in Q1 2023 included approximately **$0.2 million** of restructuring charges within the A&D segment, which were not present in Q1 2024[68](index=68&type=chunk) [EBIT](index=17&type=section&id=EBIT) Provides an analysis of consolidated and segment-level EBIT, a non-GAAP measure of operating performance Consolidated EBIT (in millions) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated EBIT | $22.1 million | $20.6 million | $1.5 million | 7.3% | | EBIT as % of net sales | 10.1% | 10.0% | 0.1% pts | | - **EBIT** is a non-GAAP financial measure used by management to evaluate the performance of its operating segments[69](index=69&type=chunk) [Aerospace & Defense EBIT](index=17&type=section&id=Aerospace%20&%20Defense%20EBIT) Details the significant increase in A&D EBIT, driven by higher sales volumes across its businesses Aerospace & Defense EBIT | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | A&D EBIT | $16.7 million | $12.5 million | $4.2 million | 33.6% | | A&D EBIT as % of net sales | 17.6% | 15.1% | 2.5% pts | | - The increase in A&D EBIT was mainly due to **higher sales volumes** at Mayday, Crissair, and Globe[71](index=71&type=chunk) [USG EBIT](index=17&type=section&id=USG%20EBIT) Analyzes the growth in USG EBIT, which resulted from increased sales volumes at both Doble and NRG USG EBIT | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | USG EBIT | $17.6 million | $16.1 million | $1.5 million | 9.3% | | USG EBIT as % of net sales | 21.2% | 22.7% | -1.5% pts | | - The increase in USG EBIT was mainly due to **higher sales volumes** at both Doble and NRG[72](index=72&type=chunk) [Test EBIT](index=17&type=section&id=Test%20EBIT) Explains the sharp decline in Test segment EBIT, caused by lower sales and acquisition-related charges Test Segment EBIT | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Test EBIT | $1.8 million | $5.4 million | $(3.6) million | -66.7% | | Test EBIT as % of net sales | 4.4% | 10.5% | -6.1% pts | | - The decrease in Test EBIT was primarily driven by **lower sales volumes** from the segment's U.S. and Asian operations[73](index=73&type=chunk) - EBIT in Q1 2024 was negatively impacted by **$0.3 million** of inventory step-up charges related to the MPE acquisition[73](index=73&type=chunk) [Corporate Costs (EBIT Impact)](index=17&type=section&id=Corporate%20Costs%20(EBIT%20Impact)) Details the increase in corporate costs, which was mainly due to share-based compensation and acquisition expenses Corporate Costs (included in EBIT) | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Corporate costs (included in EBIT) | $13.9 million | $13.5 million | $0.4 million | 3.0% | - The increase in Corporate costs was mainly due to an increase in **share-based compensation costs** and costs related to the **MPE acquisition**[74](index=74&type=chunk) [INTEREST EXPENSE, NET](index=17&type=section&id=INTEREST%20EXPENSE,%20NET) Explains the rise in net interest expense, driven by higher interest rates and increased average borrowings Interest Expense, Net | Metric | Q1 2024 (Dec 31, 2023) | Q1 2023 (Dec 31, 2022) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interest expense, net | $2.7 million | $1.7 million | $1.0 million | 58.8% | - The increase in interest expense was mainly due to **higher average interest rates** (6.8% in Q1 2024 compared to 4.6% in Q1 2023) and higher average outstanding borrowings[75](index=75&type=chunk) [INCOME TAX EXPENSE](index=18&type=section&id=INCOME%20TAX%20EXPENSE) Reports a stable effective income tax rate with no significant changes between the current and prior-year periods - The effective income tax rate was **22.0%** in Q1 2024, compared to **22.1%** in Q1 2023, with no significant changes between the periods[76](index=76&type=chunk) [CAPITAL RESOURCES AND LIQUIDITY](index=18&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) Assesses the company's financial position, highlighting strong liquidity, improved operating cash flow, and key capital activities - The company's overall financial position and liquidity remain strong, with working capital increasing to **$298.5 million** at December 31, 2023, from $266.4 million at September 30, 2023[77](index=77&type=chunk) - Net cash provided by operating activities was **$8.7 million** in Q1 2024, a significant improvement from net cash used of **$(9.0) million** in Q1 2023[78](index=78&type=chunk) - Capital expenditures increased to **$7.8 million** in Q1 2024 from $4.8 million in Q1 2023, mainly due to building improvements and machinery & equipment within the A&D segment[79](index=79&type=chunk) [Acquisition (MPE Limited)](index=18&type=section&id=Acquisition%20(MPE%20Limited)) Details the acquisition of MPE Limited, which was funded through borrowings under the company's credit facility - On November 9, 2023, the company acquired MPE Limited for approximately **$56.2 million**, net of cash acquired, integrating its operations into the Test segment[80](index=80&type=chunk) [Credit Facility](index=18&type=section&id=Credit%20Facility) Outlines the company's available borrowing capacity and outstanding debt under its bank credit facility - As of December 31, 2023, the company had approximately **$322 million** available to borrow under its bank credit facility, plus a **$250 million** increase option, and **$51.4 million** cash on hand[81](index=81&type=chunk) - Outstanding borrowings under the credit facility totaled **$172 million**[81](index=81&type=chunk) [Dividends](index=18&type=section&id=Dividends) Reports on the quarterly cash dividends paid to shareholders during and subsequent to the first quarter - A dividend of **$0.08 per share**, totaling **$2.1 million**, was paid on October 17, 2023[82](index=82&type=chunk) - A subsequent quarterly dividend of **$0.08 per share**, totaling **$2.1 million**, was paid on January 19, 2024[82](index=82&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=18&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Affirms the use of reasonable accounting policies and references the detailed disclosure in the Annual Report on Form 10-K - Management believes the accounting policies used are reasonable and appropriate, acknowledging that they require significant judgment and estimates[83](index=83&type=chunk) - The most significant areas involving management judgments and estimates are detailed in the Critical Accounting Policies section of the company's Annual Report on Form 10-K[83](index=83&type=chunk) [OTHER MATTERS](index=19&type=section&id=OTHER%20MATTERS) Addresses contingencies and forward-looking statements relevant to the company's operations and financial reporting [Contingencies](index=19&type=section&id=Contingencies) Discloses the company's involvement in routine legal and environmental matters and management's assessment of their potential impact - The company is involved in various claims, charges, litigation, and environmental matters as a normal incident of business[84](index=84&type=chunk) - 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 results[84](index=84&type=chunk) [FORWARD LOOKING STATEMENTS](index=19&type=section&id=FORWARD%20LOOKING%20STATEMENTS) Provides a safe harbor statement cautioning investors about the risks and uncertainties inherent in forward-looking statements - Statements regarding future events and results in this Form 10-Q are considered **'forward-looking statements'** under federal securities laws[85](index=85&type=chunk) - Investors are cautioned that actual future results may differ materially from projections due to various risks and uncertainties, including economic conditions, supply chain disruptions, and competition[86](index=86&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=20&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) States that the company's exposure to interest rate and foreign currency risks has not materially changed - Market risks primarily result from changes in **interest rates** and **foreign currency exchange rates**[88](index=88&type=chunk) - The company selectively uses derivative financial instruments, including forward contracts and swaps, to manage these market risks[88](index=88&type=chunk) - There has been **no material change** to the company's market risks since September 30, 2023[88](index=88&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=20&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Confirms the effectiveness of the company's disclosure controls and procedures as of the end of the reporting period - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[89](index=89&type=chunk) - There has been **no material change** in the company's internal control over financial reporting during the period covered by this report[89](index=89&type=chunk) PART II. OTHER INFORMATION This section includes information on equity securities, other disclosures, exhibits, and the report's formal signature [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=20&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Reports that the company did not repurchase any shares of its common stock during the first quarter of fiscal year 2024 - The company did **not repurchase any shares** during the first quarter of 2024[90](index=90&type=chunk) [ITEM 5. OTHER INFORMATION](index=20&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Discloses that no director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the first quarter of fiscal 2024[91](index=91&type=chunk) [ITEM 6. EXHIBITS](index=21&type=section&id=ITEM%206.%20EXHIBITS) Provides a comprehensive list of all exhibits filed with the Form 10-Q, including corporate and financial documents - 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 Fiscal 2024 Performance Share Unit Awards, Certifications of CEO and CFO, and XBRL Instance Documents[92](index=92&type=chunk) [SIGNATURE](index=22&type=section&id=SIGNATURE) Contains the formal signature block, confirming the due authorization and submission of the report - The report was signed on behalf of ESCO Technologies Inc. by Christopher L. Tucker, Senior Vice President and Chief Financial Officer, on February 9, 2024[96](index=96&type=chunk)

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)

ESCO Technologies Inc. (NYSE:ESE) Q4 2022 Earnings Conference Call November 17, 2022 5:00 PM ET Company Participants Kate Lowrey - Vice President, Investor Relations Vic Richey - Chairman and Chief Executive Officer Chris Tucker - Senior Vice President and Chief Financial Officer Bryan Sayler - President, Utility Solutions Group Conference Call Participants Jon Tanwanteng - CJS Securities John Franzreb - Sidoti Operator Good day and thank you for standing by. Welcome to the Fourth Quarter 2022 ESCO Technolo ...

ESCO Technologies Fourth Quarter FY 2022 Earnings Call Vic Richey Chairman, CEO & President Chris Tucker Sr. Vice President & CFO Bryan Sayler Utility Solutions Group President November 17, 20221 Forward Looking Statement Statements in this presentation and made during today's conference call regarding the timing and magnitude of recovery in the Company's end markets, the continuing impacts of COVID-19 on the Company's results, sales, Adjusted EBIT, Adjusted EBITDA, Adjusted EPS, cash flow, results of cost ...