ESCO Technologies(ESE) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents unaudited condensed consolidated financial statements, notes, management's discussion, market risk disclosures, and controls and procedures ITEM 1. FINANCIAL STATEMENTS This section presents unaudited condensed consolidated financial statements, including operations, comprehensive income, balance sheets, cash flows, and detailed notes CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, 2024 vs. 2023 (Dollars in thousands, except per share amounts) | Metric | 2024 | 2023 | Change | % Change | | :----------------------------------- | :--------- | :--------- | :------- | :------- | | Net sales | $260,783 | $248,749 | $12,034 | 4.84% | | Total costs and expenses | $223,611 | $213,243 | $10,368 | 4.86% | | Earnings before income taxes | $37,172 | $35,506 | $1,666 | 4.69% | | Net earnings | $29,230 | $27,943 | $1,287 | 4.61% | | Basic - Net earnings per share | $1.14 | $1.08 | $0.06 | 5.56% | | Diluted - Net earnings per share | $1.13 | $1.08 | $0.05 | 4.63% | Nine Months Ended June 30, 2024 vs. 2023 (Dollars in thousands, except per share amounts) | Metric | 2024 | 2023 | Change | % Change | | :----------------------------------- | :--------- | :--------- | :------- | :------- | | Net sales | $728,226 | $683,386 | $44,840 | 6.56% | | Total costs and expenses | $642,379 | $605,631 | $36,748 | 6.07% | | Earnings before income taxes | $85,847 | $77,755 | $8,092 | 10.41% | | Net earnings | $67,618 | $60,548 | $7,070 | 11.68% | | Basic - Net earnings per share | $2.62 | $2.35 | $0.27 | 11.49% | | Diluted - Net earnings per share | $2.62 | $2.34 | $0.28 | 11.97% | CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended June 30, 2024 vs. 2023 (Dollars in thousands) | Metric | 2024 | 2023 | Change | % Change | | :------------------------------------------ | :--------- | :--------- | :------- | :------- | | Net earnings | $29,230 | $27,943 | $1,287 | 4.61% | | Foreign currency translation adjustments | $(1,001) | $(821) | $(180) | 21.92% | | Comprehensive income | $28,229 | $27,122 | $1,107 | 4.08% | Nine Months Ended June 30, 2024 vs. 2023 (Dollars in thousands) | Metric | 2024 | 2023 | Change | % Change | | :------------------------------------------ | :--------- | :--------- | :------- | :------- | | Net earnings | $67,618 | $60,548 | $7,070 | 11.68% | | Foreign currency translation adjustments | $3,668 | $12,926 | $(9,258) | -71.62% | | Comprehensive income | $71,286 | $73,474 | $(2,188) | -2.98% | CONDENSED CONSOLIDATED BALANCE SHEETS Balance Sheet Highlights (June 30, 2024 vs. September 30, 2023, Dollars in thousands) | Metric | June 30, 2024 | Sept 30, 2023 | Change | % Change | | :------------------------- | :------------ | :------------ | :------- | :------- | | Total current assets | $652,895 | $581,095 | $71,800 | 12.36% | | Total assets | $1,811,055 | $1,683,214 | $127,841 | 7.59% | | Total current liabilities | $311,207 | $314,651 | $(3,444) | -1.09% | | Long-term debt | $153,000 | $82,000 | $71,000 | 86.59% | | Total liabilities | $617,369 | $552,072 | $65,297 | 11.83% | | Total shareholders' equity | $1,193,686 | $1,131,142 | $62,544 | 5.53% | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended June 30, 2024 vs. 2023 (Dollars in thousands) | Metric | 2024 | 2023 | Change | % Change | | :------------------------------------------------- | :--------- | :--------- | :------- | :------- |\n| Net cash provided by operating activities | $55,454 | $29,202 | $26,252 | 89.90% |\n| Net cash used by investing activities | $(89,888) | $(43,950) | $(45,938) | 104.52% |\n| Net cash provided (used) by financing activities | $55,301 | $(26,147) | $81,448 | 311.50% |\n| Net increase (decrease) in cash and cash equivalents | $21,176 | $(41,672) | $62,848 | -150.82% |\n| Cash and cash equivalents, end of period | $63,042 | $56,052 | $6,990 | 12.47% | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION - The unaudited condensed consolidated financial statements include all necessary adjustments for a fair presentation and are prepared in accordance with Form 10-Q requirements[16] - These statements should be read in conjunction with the audited consolidated financial statements and notes from the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023[16] - Management's estimates and assumptions are used in preparing the financial statements, and actual results may differ from these estimates[17] 2. EARNINGS PER SHARE (EPS) - Basic EPS is calculated using the weighted average number of common shares outstanding, while diluted EPS includes dilutive common share options and restricted/performance shares using the treasury stock method[18] Weighted Average Shares Outstanding (in thousands) | Period | Basic (2024) | Basic (2023) | Diluted (2024) | Diluted (2023) | | :------------------------ | :----------- | :----------- | :------------- | :------------- | | Three Months Ended June 30 | 25,753 | 25,757 | 25,840 | 25,827 | | Nine Months Ended June 30 | 25,781 | 25,808 | 25,844 | 25,890 | 3. ACQUISITION - On November 9, 2023, the Company acquired MPE Limited (MPE), a UK-based manufacturer of high-performance EMC/EMP filters and capacitor products, for approximately $56.2 million, net of cash acquired[19] - MPE's operating results have been included as part of ETS-Lindgren in the Test segment since the acquisition date[19] - The acquisition included $31.1 million of identifiable intangible assets, primarily customer relationships ($29.1 million), and $30.3 million of goodwill[19] 4. SHARE-BASED COMPENSATION - Total share-based compensation cost recognized in SG&A was $2.2 million for the three months ended June 30, 2024, and $6.4 million for the nine months ended June 30, 2024[23] - As of June 30, 2024, there was $11.0 million of total unrecognized compensation cost related to share-based compensation arrangements, expected to be recognized over a remaining weighted-average period of 1.5 years[23] 5. INVENTORIES Inventories (in thousands) | Category | June 30, 2024 | September 30, 2023 | Change | % Change | | :---------------- | :------------ | :----------------- | :------- | :------- | | Finished goods | $41,955 | $34,577 | $7,378 | 21.34% | | Work in process | $59,837 | $42,178 | $17,659 | 41.87% | | Raw materials | $117,520 | $107,312 | $10,208 | 9.51% | | Total inventories | $219,312 | $184,067 | $35,245 | 19.15% | 6. GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill increased to $535.4 million at June 30, 2024, from $503.2 million at September 30, 2023[26] - Acquisition activity, specifically the MPE acquisition, contributed $30.5 million to goodwill in the Test segment during the nine months ended June 30, 2024[27] Intangible Assets with Determinable Lives (Net, in thousands) | Category | June 30, 2024 | September 30, 2023 | | :------------------- | :------------ | :----------------- | | Patents | $1,229 | $1,298 | | Capitalized software | $40,911 | $41,109 | | Customer relationships | $200,215 | $183,616 | | Other | $4,037 | $4,654 | 7. BUSINESS SEGMENT INFORMATION - The Company operates in three reportable segments: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test)[28] Net Sales by Segment (in thousands) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Aerospace & Defense | $114,450 | $103,469 | $323,884 | $285,434 | | USG | $90,277 | $89,966 | $260,570 | $240,172 | | Test | $56,056 | $55,314 | $143,772 | $157,780 | | Consolidated totals | $260,783 | $248,749 | $728,226 | $683,386 | EBIT by Segment (in thousands) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Aerospace & Defense | $21,356 | $21,665 | $61,396 | $52,996 | | USG | $22,155 | $20,351 | $57,355 | $50,543 | | Test | $9,292 | $8,643 | $16,614 | $21,280 | | Corporate (loss) | $(12,296) | $(12,658) | $(40,290) | $(40,642) | | Consolidated EBIT | $40,507 | $38,001 | $95,075 | $84,177 | 8. DEBT - Total borrowings increased to $173.0 million at June 30, 2024, from $102.0 million at September 30, 2023[36] - The Company has a $500 million revolving line of credit, maturing August 30, 2028, with an option to increase by an additional $250 million[37] - As of June 30, 2024, the Company had approximately $321 million available to borrow under the Credit Facility, in addition to $63.0 million cash on hand[38] - Weighted average interest rates were 6.7% for the three months ended June 30, 2024 (up from 6.05% in 2023), and 6.8% for the nine months ended June 30, 2024 (up from 5.57% in 2023)[39] 9. INCOME TAX EXPENSE - The effective income tax rate for Q3 2024 was 21.4%, compared to 21.3% in Q3 2023[40] - The effective income tax rate for the first nine months of 2024 was 21.2%, compared to 22.1% for the first nine months of 2023[40] - Income tax expense in the first nine months of 2024 was favorably impacted by discrete events in Q2 2024, including the release of a foreign valuation allowance and excess tax benefit from share-based director compensation vesting[40] 10. SHAREHOLDERS' EQUITY - Total shareholders' equity increased to $1,193.7 million at June 30, 2024, from $1,131.1 million at September 30, 2023[11][42] - Retained earnings increased by $61.4 million from September 30, 2023, to June 30, 2024, driven by net earnings ($67.6 million) partially offset by dividends paid ($6.2 million)[42] - Treasury stock increased by $7.7 million due to share repurchases during the nine months ended June 30, 2024[42] 11. FAIR VALUE MEASUREMENTS - 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[44] - The Company's forward contracts and interest rate swaps are classified within Level 2 of the valuation hierarchy and are immaterial[45] - No impairment charges were recorded for nonfinancial assets (property, plant and equipment, and other intangible assets) during the three and nine-month periods ended June 30, 2024[46] 12. REVENUES Total Revenues by Customer Type (Three Months Ended June 30, 2024 vs. 2023, in thousands) | Customer Type | Q3 2024 | Q3 2023 | Change | % Change | | :------------ | :--------- | :--------- | :------- | :------- | | Commercial | $175,807 | $182,423 | $(6,616) | -3.63% | | Government | $84,976 | $66,326 | $18,650 | 28.12% | | Total revenues | $260,783 | $248,749 | $12,034 | 4.84% | Total Revenues by Geographic Location (Three Months Ended June 30, 2024 vs. 2023, in thousands) | Geographic Location | Q3 2024 | Q3 2023 | Change | % Change | | :------------------ | :--------- | :--------- | :------- | :------- | | United States | $181,903 | $173,288 | $8,615 | 4.97% | | International | $78,880 | $75,461 | $3,419 | 4.53% | | Total revenues | $260,783 | $248,749 | $12,034 | 4.84% | - Remaining performance obligations (backlog) were $888.7 million at June 30, 2024, with approximately 68% expected to be recognized as revenue in the next twelve months[54] 13. LEASES Total Lease Costs (Dollars in thousands) | Period | 2024 | 2023 | | :------------------------------- | :--------- | :--------- | | Three Months Ended June 30 | $2,522 | $2,481 | | Nine Months Ended June 30 | $7,464 | $7,233 | - As of June 30, 2024, the weighted-average remaining lease term for operating leases was 10.8 years (vs. 11.4 years in 2023) and for finance leases was 11.1 years (vs. 11.3 years in 2023)[58] - The weighted-average discount rate for operating leases was 4.56% (vs. 4.42% in 2023) and for finance leases was 4.69% (vs. 4.62% in 2023) as of June 30, 2024[58] 14. NEW ACCOUNTING PRONOUNCEMENTS - FASB ASU 2023-07 (Segment Reporting) is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, expanding disclosure requirements for reportable segments[60] - FASB ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, providing qualitative and quantitative updates to rate reconciliation and income taxes paid disclosures[61] - Management expects no change to consolidated statements of operations, financial position, or cash flows from these ASUs, only additional disclosures[60][61] 15. SUBSEQUENT EVENT - On July 8, 2024, the Company agreed to acquire Ultra Maritime's Signature Management & Power business for approximately $550 million, to be funded through cash on hand and incremental debt[62] - The acquired business, expected to generate approximately $175 million in revenue in calendar year 2024, will become part of ESCO's Aerospace & Defense segment[62] - An amendment to the credit agreement on August 5, 2024, established a senior incremental delayed draw term loan credit facility of up to $375 million to help fund the acquisition[63] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial performance for Q3 and YTD FY2024, covering net sales, segment results, orders, expenses, EBIT, and capital resources RESULTS OF OPERATIONS OVERVIEW Q3 2024 vs. Q3 2023 Financial Highlights (Dollars in millions, except per share amounts) | Metric | 2024 | 2023 | Change | % Change | | :----------- | :----------- | :----------- | :------- | :------- | | Sales | $260.8 | $248.7 | $12.1 | 4.87% | | Net earnings | $29.2 | $27.9 | $1.3 | 4.66% | | Diluted EPS | $1.13 | $1.08 | $0.05 | 4.63% | First Nine Months 2024 vs. 2023 Financial Highlights (Dollars in millions, except per share amounts) | Metric | 2024 | 2023 | Change | % Change | | :----------- | :----------- | :----------- | :------- | :------- | | Sales | $728.2 | $683.4 | $44.8 | 6.55% | | Net earnings | $67.6 | $60.5 | $7.1 | 11.74% | | Diluted EPS | $2.62 | $2.34 | $0.28 | 11.97% | NET SALES - Net sales in Q3 2024 increased by $12.1 million (4.8%) to $260.8 million, driven by increases in the A&D ($11.0 million), Test ($0.8 million), and USG ($0.3 million) segments[67] - Net sales in the first nine months of 2024 increased by $44.8 million (6.6%) to $728.2 million, primarily due to increases in A&D ($38.5 million) and USG ($20.4 million), partially offset by a $14.0 million decrease in the Test segment[67] Aerospace & Defense (A&D) - Q3 2024 net sales for A&D increased by $11.0 million (10.6%) to $114.5 million, mainly due to increases in commercial aerospace shipments ($2.3 million), defense aerospace shipments ($2.1 million), and navy revenues ($8.1 million)[68] - YTD Q3 2024 net sales for A&D increased by $38.5 million (13.5%) to $323.9 million, driven by increases in commercial aerospace ($10.0 million), defense aerospace ($8.0 million), navy ($18.1 million), and space revenues ($1.8 million)[68] USG - Q3 2024 net sales for USG increased by $0.3 million (0.3%) to $90.3 million, primarily due to higher service revenue at Doble, partially offset by lower protection testing revenue[70] - YTD Q3 2024 net sales for USG increased by $20.4 million (8.5%) to $260.6 million, mainly due to increases in Doble's service revenue, cybersecurity/compliance (DUCe) revenue, offline test revenue, and NRG sales driven by renewable energy market strength[70] Test - Q3 2024 net sales for Test increased by $0.8 million (1.3%) to $56.1 million, primarily due to a $4.4 million increase from European operations (MPE acquisition), partially offset by decreases in U.S. and Asian operations[71] - YTD Q3 2024 net sales for Test decreased by $14.0 million (8.9%) to $143.8 million, mainly due to lower sales from U.S. and Asian operations and timing of test and measurement chamber projects, partially offset by a $1.6 million increase from European operations[71] ORDERS AND BACKLOG - Backlog increased to $888.7 million at June 30, 2024, compared with $772.4 million at September 30, 2023[72] - New orders in Q3 2024 totaled $311.7 million (up from $213.3 million in Q3 2023), with A&D contributing $146.9 million and USG $100.0 million[72] - New orders in the first nine months of 2024 totaled $844.5 million (up from $693.8 million in 2023), with A&D contributing $434.5 million and USG $256.0 million[73] SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - SG&A expenses for Q3 2024 were $55.0 million (21.1% of net sales), slightly down from $55.4 million (22.3% of net sales) in Q3 2023[74] - For the first nine months of 2024, SG&A expenses were $164.0 million (22.5% of net sales), up from $160.6 million (23.5% of net sales) in 2023, mainly due to higher sales, inflationary impacts, and MPE acquisition impacts in the USG and A&D segments[74] AMORTIZATION OF INTANGIBLE ASSETS - Amortization of intangible assets was $8.1 million for Q3 2024 (up from $7.1 million in Q3 2023) and $24.6 million for the first nine months of 2024 (up from $21.0 million in 2023)[75] - The increase is mainly due to higher amortization of capitalized software and intangible assets related to the MPE and CMT acquisitions[75] OTHER EXPENSES (INCOME), NET - Other expenses (income), net, was ($0.3) million in Q3 2024, compared to $1.0 million of expenses in Q3 2023[76] - For the first nine months of 2024, other expenses, net, was $0.6 million, compared to $1.7 million of expenses in 2023, with 2024 primarily including $0.9 million in restructuring charges[76] EBIT - Consolidated EBIT was $40.5 million (15.5% of net sales) for Q3 2024, up from $38.0 million (15.3% of net sales) for Q3 2023[77] - For the first nine months of 2024, consolidated EBIT was $95.1 million (13.1% of net sales), up from $84.2 million (12.3% of net sales) for the first nine months of 2023[77] Reconciliation of EBIT to Net Earnings (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net earnings | $29,230 | $27,943 | $67,618 | $60,548 | | Plus: Interest expense, net | $3,335 | $2,495 | $9,228 | $6,422 | | Plus: Income tax expense | $7,942 | $7,563 | $18,229 | $17,207 | | Consolidated EBIT | $40,507 | $38,001 | $95,075 | $84,177 | Aerospace & Defense - A&D EBIT in Q3 2024 was $21.4 million (18.7% of net sales), slightly down from $21.7 million (20.9% of net sales) in Q3 2023, negatively impacted by margin erosion on space development programs, revenue mix, and inflationary pressures[79] - A&D EBIT in the first nine months of 2024 increased to $61.4 million (19.0% of net sales) from $53.0 million (18.6% of net sales) in 2023, mainly driven by leverage on higher sales volumes and price increases[79] USG - USG EBIT in Q3 2024 increased to $22.2 million (24.5% of net sales) from $20.4 million (22.6% of net sales) in Q3 2023[81] - USG EBIT in the first nine months of 2024 increased to $57.4 million (22.0% of net sales) from $50.5 million (21.0% of net sales) in 2023, mainly due to leverage on higher sales volumes at Doble and NRG, price increases, and mix[81] Test - Test EBIT in Q3 2024 increased to $9.3 million (16.6% of net sales) from $8.6 million (15.6% of net sales) in Q3 2023, mainly due to higher sales volumes from the segment's European operations driven by the MPE acquisition[82] - Test EBIT in the first nine months of 2024 decreased to $16.6 million (11.6% of net sales) from $21.3 million (13.5% of net sales) in 2023, primarily due to lower sales volumes from U.S. and Asian operations and inflationary pressures[82] Corporate - Corporate costs decreased to $12.3 million in Q3 2024 (from $12.7 million in Q3 2023) and to $40.3 million in the first nine months of 2024 (from $40.6 million in 2023), mainly due to lower executive management transition costs incurred in the prior year[83] INTEREST EXPENSE, NET - Interest expense increased to $3.3 million in Q3 2024 (from $2.5 million in Q3 2023) and $9.2 million in the first nine months of 2024 (from $6.4 million in 2023)[84] - The increase is mainly due to higher average interest rates (6.71% in Q3 2024 vs. 6.05% in Q3 2023) and higher average outstanding borrowings[84] INCOME TAX EXPENSE - The effective income tax rate for Q3 2024 was 21.4% (vs. 21.3% in Q3 2023)[85] - The effective income tax rate for the first nine months of 2024 was 21.2% (vs. 22.1% in 2023), favorably impacted by discrete events in Q2 2024, including a foreign valuation allowance release and excess tax benefit from share-based director compensation vesting[85] CAPITAL RESOURCES AND LIQUIDITY - Working capital increased to $341.7 million at June 30, 2024, from $266.4 million at September 30, 2023, driven by increases in inventories ($35.2 million) and accounts receivable ($15.0 million)[86] - Net cash provided by operating activities increased to $55.5 million in the first nine months of 2024, from $29.2 million in 2023, mainly due to increased accounts receivable collections and higher earnings[87] - Capital expenditures increased to $24.9 million in the first nine months of 2024, from $17.0 million in 2023, primarily due to building improvements and machinery & equipment within the A&D segment[87] Subsequent Event - On July 8, 2024, the Company announced an agreement to acquire Ultra Maritime's Signature Management & Power business for approximately $550 million, to be funded by cash on hand and incremental debt[88] - An amendment to the credit agreement on August 5, 2024, implemented a senior incremental delayed draw term loan credit facility of up to $375 million to pay a portion of the cash consideration for the Ultra Maritime acquisition[89] Acquisition - 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[90] Credit Facility - At June 30, 2024, the Company had approximately $321 million available to borrow under its bank credit facility, a $250 million increase option, and $63.0 million cash on hand[91] - Outstanding borrowings under the credit facility totaled $173 million, with $5.5 million in outstanding letters of credit[91] Share Repurchases - During the first nine months of 2024, the Company repurchased approximately 80,000 shares for approximately $8.0 million[91] - The Board of Directors renewed the common stock repurchase program in August 2024 for an additional three years, expiring September 30, 2027, with a new maximum repurchase amount of $200 million[101] Dividends - The Company paid quarterly dividends of $0.08 per share, totaling $2.1 million each, on October 17, 2023, January 19, 2024, and April 16, 2024[92] - A subsequent dividend of $0.08 per share, totaling $2.1 million, was paid on July 19, 2024[92] CRITICAL ACCOUNTING POLICIES - Management has evaluated the accounting policies and believes them to be reasonable and appropriate[93] - Certain accounting policies require significant judgment and estimates, which are based on historical experience, industry trends, and external information[93] - 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 for the fiscal year ended September 30, 2023[93] OTHER MATTERS Contingencies - The Company is involved in various claims, charges, litigation, and environmental matters as a normal incident of business[94] - 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, capital expenditures, or competitive position[94] FORWARD LOOKING STATEMENTS - Statements in this Form 10-Q regarding future events and results are considered "forward-looking statements" under federal securities laws[95] - Investors are cautioned that actual results may differ materially from projections due to various risks and uncertainties, including economic conditions, supply chain disruptions, contract awards, government funding, competition, and the integration of recently acquired businesses[96] - The Company undertakes no duty to update these forward-looking statements except as required by applicable laws or regulations[96] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Primary market risks are interest rates and foreign currency, managed with derivatives, with no material change since September 30, 2023 - Market risks primarily result from changes in interest rates and foreign currency exchange rates[97] - The Company selectively uses derivative financial instruments, including forward contracts and swaps, to manage these market risks[97] - There has been no material change to the Company's market risks since September 30, 2023[97] ITEM 4. CONTROLS AND PROCEDURES Management evaluated disclosure controls and procedures as effective, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective as of June 30, 2024[98] - There has been no material change in the Company's internal control over financial reporting during the period covered by this report[98] PART II. OTHER INFORMATION This section details unregistered sales of equity securities, use of proceeds, and lists all exhibits filed with the Form 10-Q Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchase activities, including shares purchased, average price, remaining value, and program renewal by the Board of Directors Issuer Purchases of Equity Securities (April 1 - June 30, 2024) | 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 | | :---------------- | :----------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | April 1-30, 2024 | 8,126 | $99.65 | 8,126 | $159.6 million | | May 1-31, 2024 | 0 | N/A | 0 | $159.6 million | | June 1-30, 2024 | 0 | N/A | 0 | $159.6 million | | Total | 8,126 | $99.65 | 8,126 | $159.6 million | - The Board of Directors renewed the common stock repurchase program in August 2024 for an additional three years, expiring September 30, 2027, with a new maximum repurchase amount of $200 million[101] ITEM 6. EXHIBITS Lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreements, stock purchase plans, certifications, and XBRL data - Exhibits include Restated Articles of Incorporation, Bylaws, Amended and Restated Credit Agreement, and the Tenth Amendment and Restatement of Employee Stock Purchase Plan[102] - Certifications of the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, and 32) are filed[102] - XBRL Instance Document and related schema, calculation, definition, label, and presentation linkbase documents are submitted[102] SIGNATURE Formally certifies the filing of the Form 10-Q report by ESCO Technologies Inc., signed by Christopher L. Tucker on August 9, 2024 - The report is signed by Christopher L. Tucker, Senior Vice President and Chief Financial Officer, as the duly authorized officer and principal accounting and financial officer[104] - The filing date of the report is August 9, 2024[104]