ESCO Technologies(US:ESE)2025-12-01 19:23Revenue Segments - The A&D segment accounted for approximately 44% of total revenue from continuing operations in 2025, up from 34% in 2023[21] - The USG segment represented about 35% of total revenue from continuing operations in 2025, down from 40% in 2024 and 2023[24] - The Test segment contributed approximately 21% of total revenue from continuing operations in 2025, a decrease from 26% in 2023[27] - Direct and indirect sales to the U.S. Government accounted for approximately 23% of total revenue from continuing operations in 2025, up from 17% in 2023[32] - The company’s international sales accounted for approximately 34% of total revenue from continuing operations in 2025[31] - Approximately 23% of the company's revenues from continuing operations in 2025 were generated from sales to the U.S. Government or its contractors, primarily within the A&D segment[66] Backlog and Orders - Total Company backlog of firm orders at September 30, 2025, was $1,133.6 million, an increase of 70.7% from $664.2 million at September 30, 2024[40] - The company's twelve-month backlog as of September 30, 2025, was approximately $722 million, representing confirmed orders expected to be recognized as revenue within the next twelve months[68] - Entered orders for 2025 totaled $1,564.8 million, resulting in a book-to-bill ratio of 1.43x, with backlog increasing by 70.7% to $1,133.6 million[132][135] Acquisitions and Investments - In April 2025, the company acquired the Signature Management & Power business, enhancing its capabilities in naval defense solutions[19] - The company acquired MPE Limited in November 2023, a manufacturer of high-performance products for critical infrastructure applications[19] - The company completed the acquisition of ESCO Maritime Solutions for approximately $472 million on April 25, 2025, contributing to revenue growth[132] - The company completed the sale of its former A&D subsidiary VACCO Industries for net sales proceeds of approximately $270 million in July 2025, reflecting a strategic portfolio analysis aimed at high-growth markets[152] Financial Performance - Sales for 2025 were $1,095.4 million, a 19.2% increase from $919.1 million in 2024, with net earnings from continuing operations rising to $116.3 million from $102.6 million[127] - Diluted EPS – GAAP from continuing operations increased by 13.1% to $4.49 in 2025, compared to $3.97 in 2024[127] - EBIT from continuing operations increased to $170.4 million in 2025, a 16.6% rise from $146.2 million in 2024, with significant contributions from all segments[141] - Net cash provided by operating activities from continuing operations increased to $200.4 million in 2025 from $121.6 million in 2024, driven by higher net earnings and lower working capital requirements[156] Operational Efficiency - The company is focused on reducing operating costs and enhancing product branding through the ESCO Operating System initiative, which began in 2025[19] - Selling, general and administrative expenses were $234.6 million, or 21.4% of net sales, compared to 22.7% in 2024, reflecting improved efficiency[137] - The company incurred capital expenditures of $36.3 million in 2025, up from $28.3 million in 2024, with increases across all three business segments[157] Workforce and Culture - As of September 30, 2025, the company employed 3,425 individuals, with 3,359 being full-time employees, and 28% located in 16 offices outside the USA[48] - The average tenure of the company's workforce was 9 years, with one-third of employees having been with the company for 10 or more years[55] - The company conducted a global engagement survey with a response rate of 74%, showing an overall global engagement increase to 83%[52] - The company has launched the Leadership Education and Development Program (LEAD) to foster professional growth, with an inaugural cohort of ten participants starting in April 2025[54] Compliance and Risks - The company faces significant compliance costs and reputational risks due to complex U.S. and foreign government regulations affecting international sales[76] - Environmental laws and regulations could increase compliance costs and adversely affect profitability, with potential fines for non-compliance[90] - Cybersecurity threats pose risks to the company's information technology systems, potentially affecting business operations and incurring significant costs[80] - The company is exposed to product liability risks, which could result in costly fixes and litigation if defects are found in products[87] Financial Controls and Governance - The company maintained effective internal control over financial reporting as of September 30, 2025, based on criteria established in the Internal Control – Integrated Framework[183] - The internal control over financial reporting has been audited by Grant Thornton, an independent registered public accounting firm, as of September 30, 2025[185] - The Company has adopted an Insider Trading Policy to prevent trading in Company securities while in possession of material non-public information[191] Stock and Shareholder Information - As of November 14, 2025, there were approximately 1,894 holders of record of the company's common stock[110] - The company's common stock is listed on the New York Stock Exchange under the trading symbol "ESE"[110] - The company did not repurchase any shares during the fourth quarter of 2025[111] - The cumulative total shareholder return for the company was $266.11 as of September 30, 2025, compared to $100 at the start of the measurement period on September 30, 2020[117]