ESCO Technologies Inc. Reports Strong Q1 2025 Performance with 13.2% Sales Growth and Increased Earnings Guidance

ESCO Technologies reported Q1 2025 financial results, showing sales growth, increased EPS, and raised full-year guidance.

Quiver AI Summary

ESCO Technologies Inc. reported strong financial results for the first quarter of fiscal 2025, ending December 31, 2024, with sales increasing by 13.2% to $247 million, up from $218.3 million in Q1 2024. The company achieved a GAAP earnings per share (EPS) of $0.91, a 54% increase year-over-year, and an adjusted EPS of $1.07, marking a 41% rise when adjusted for acquisition-related amortization. The order intake reached $275 million, leading to a record backlog of $907 million. Growth was driven by all segments, particularly the Aerospace & Defense segment, which saw a 21% increase in sales, fueled by strong demand in Navy and commercial aerospace markets. Management expressed confidence in the company's outlook, raising full-year earnings guidance due to favorable market conditions and operational improvements. Additionally, ESCO is nearing completion of its acquisition of the Signature Management & Power business, expected to enhance its Navy business capabilities. The company also declared a quarterly cash dividend of $0.08 per share, to be paid on April 17, 2025.

Potential Positives

• Sales increased by $28.7 million (13.2 percent) to $247.0 million compared to $218.3 million in Q1 2024.
• Record backlog of $907 million was achieved, with Entered Orders at $275.0 million and a book-to-bill ratio of 1.11x.
• GAAP EPS increased 54 percent to $0.91 per share compared to $0.59 per share in Q1 2024.
• Full-year earnings guidance has been raised by $0.25, reflecting strong market conditions and operational performance, now ranging from $5.55 to $5.75.

Potential Negatives

• Entered Orders in the Aerospace & Defense segment decreased by 30 percent, indicating a potential slowdown in future sales which may affect overall revenue growth.
• The company is excluding acquisition-related amortization from its Adjusted EPS calculation, which may raise concerns about the sustainability of earnings growth when factoring in ongoing acquisition costs.
• There are significant risks mentioned in the forward-looking statements regarding factors affecting the company's operations, such as supply chain disruptions and potential regulatory issues related to the pending acquisition of SM&P.

FAQ

What were ESCO Technologies' Q1 2025 sales figures?

ESCO Technologies reported Q1 2025 sales of $247.0 million, a 13.2% increase from $218.3 million in Q1 2024.

How much did ESCO's GAAP EPS increase in Q1 2025?

GAAP EPS increased 54% to $0.91 per share in Q1 2025, compared to $0.59 per share in Q1 2024.

What contributed to ESCO's record backlog in Q1 2025?

ESCO's record backlog of $907 million was driven by entering orders worth $275 million, resulting in a book-to-bill ratio of 1.11x.

What are the key segments showing sales growth for ESCO?

Key segments showing growth include Aerospace & Defense, Utility Solutions Group, and RF Test & Measurement, with notable revenue increases.

How has ESCO adjusted its earnings guidance for FY 2025?

ESCO has raised its full-year earnings guidance to a range of $5.55 to $5.75, reflecting strong market conditions and operational performance.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$ESE Insider Trading Activity

$ESE insiders have traded $ESE stock on the open market 3 times in the past 6 months. Of those trades, 0 have been purchases and 3 have been sales.

Here’s a breakdown of recent trading of $ESE stock by insiders over the last 6 months:

• VINOD M KHILNANI has made 0 purchases and 2 sales selling 4,000 shares for an estimated $480,117.
• GLORIA L VALDEZ sold 2,349 shares for an estimated $349,049

To track insider transactions, check out Quiver Quantitative's insider trading dashboard.

$ESE Hedge Fund Activity

We have seen 117 institutional investors add shares of $ESE stock to their portfolio, and 113 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• SILVERCREST ASSET MANAGEMENT GROUP LLC removed 601,477 shares (-50.6%) from their portfolio in Q3 2024, for an estimated $77,578,503
• SELECT EQUITY GROUP, L.P. removed 395,460 shares (-100.0%) from their portfolio in Q3 2024, for an estimated $51,006,430
• GOLDMAN SACHS GROUP INC added 335,069 shares (+273.8%) to their portfolio in Q3 2024, for an estimated $43,217,199
• MORGAN STANLEY added 299,124 shares (+95.3%) to their portfolio in Q3 2024, for an estimated $38,581,013
• WILLIAM BLAIR INVESTMENT MANAGEMENT, LLC added 294,646 shares (+inf%) to their portfolio in Q3 2024, for an estimated $38,003,441
• WELLINGTON MANAGEMENT GROUP LLP added 150,503 shares (+inf%) to their portfolio in Q3 2024, for an estimated $19,411,876
• ROYCE & ASSOCIATES LP removed 100,852 shares (-15.4%) from their portfolio in Q3 2024, for an estimated $13,007,890

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.

Full Release

St. Louis, Feb. 06, 2025 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the first quarter ended December 31, 2024 (Q1 2025).

Operating Highlights

• 
  Q1 2025 Sales increased $28.7 million (13.2 percent) to $247.0 million compared to $218.3 million in Q1 2024.
  


• 
  Q1 2025 Entered Orders were $275.0 million for a book-to-bill ratio of 1.11x, resulting in record backlog of $907 million.
  


• 
  Q1 2025 GAAP EPS increased 54 percent to $0.91 per share compared to $0.59 per share in Q1 2024.
  


• 
  Q1 2025 Adjusted EPS as defined in prior guidance increased 48 percent to $0.92 per share compared to $0.62 per share in Q1 2024.
  


• 
  Beginning in Q1 2025 we are excluding acquisition related amortization (which was $0.15 per share in Q1 2025) from our Adjusted EPS calculation. Q1 2025 Adjusted EPS excluding acquisition related amortization increased 41 percent to $1.07 per share compared to $0.76 per share in Q1 2024.
  


• 
  Net cash provided by operating activities was $34 million in Q1 2025, an increase of $25 million compared to the prior year period, as cash flow was positively impacted by higher net earnings and favorable working capital impacts.
  

Bryan Sayler, Chief Executive Officer and President, commented, “Our fiscal year got off to an outstanding start as we delivered 13 percent top line growth, over 200 basis points of Adjusted EBITDA margin expansion, and a 41 percent increase in Adjusted EPS compared to the prior year. All three segments delivered solid revenue growth, highlighted by notable strength across our Navy, commercial aerospace and utility end-markets. It was also great to see our Test business deliver a solid quarter with improving order flow, double digit revenue growth, and over 500 basis points of margin expansion.

“The ESCO team continues to build upon our strong position in attractive markets to increase value across the enterprise. Overall, it was a great way to start the year, with continuing momentum across our end markets giving us the confidence to raise our full year earnings guidance.”

Segment Performance

Aerospace & Defense (A&D)

• 
  Sales increased $19.6 million (21 percent) to $114.3 million in Q1 2025 from $94.7 million in Q1 2024. The Q1 increase was driven by strength in Navy and commercial aerospace, partially offset by lower defense aerospace.
  


• 
  Q1 2025 EBIT and Adjusted EBIT both increased $4.9 million to $21.6 million (18.9 percent margin) from $16.7 million (17.6 percent margin) in Q1 2024. Margin improvement was driven by leverage on higher volume and price increases, partially offset by inflationary pressures and mix.
  


• 
  Entered Orders decreased $51 million (30 percent) to $121 million in Q1 2025 compared to $172 million in Q1 2024.   The decrease in orders was primarily driven by large Navy orders for Virginia Class Block V surface hull tiles and Block VI long lead material procurement for the Light-Weight Wide Aperture Array (LWWAA) in Q1 2024, partially offset by higher Q1 2025 Navy ejection valve and spares orders.   Orders in the quarter resulted in a segment book-to-bill of 1.06x and record ending backlog of $607 million.
  
  
  
  
  

Utility Solutions Group (USG)

• 
  Sales increased $3.7 million (4 percent) to $86.7 million in Q1 2025 from $83.0 million in Q1 2024. Doble’s sales increased by $7.9 million (12 percent) driven by a strong quarter for offline and protection testing products and services. NRG sales decreased $4.2 million (22 percent) due to moderation in renewable energy projects in the quarter.
  


• 
  EBIT increased $2.9 million in Q1 2025 to $20.5 million from $17.6 million in Q1 2024. Adjusted EBIT increased $2.8 million to $20.5 million (23.6 percent margin) from $17.7 million (21.4 percent margin) in Q1 2024.   Margin was favorably impacted by leverage on higher volume, price increases, and mix, partially offset by inflationary pressures.
  


• 
  Entered Orders increased $13 million (16 percent) to $90 million in Q1 2025. Doble orders increased by $10 million (15 percent) on strength across their product portfolio and highlighted by a $4.3 million order for offline test equipment at Phenix. NRG orders increased by $3 million in the quarter.   The segment book-to-bill was 1.03x in the quarter and resulted in an ending backlog of $123 million.
  
  
  
  
  

RF Test & Measurement (Test)

• 
  Sales increased $5.5 million (13 percent) to $46.1 million in Q1 2025 from $40.6 million in Q1 2024. Sales growth primarily related to higher U.S. shielding, Test and Measurement in EMEA, and MPE filter sales.
  


• 
  EBIT increased $2.6 million in Q1 2025 to $4.4 million from $1.8 million in Q1 2024. Adjusted EBIT increased $2.8 million in Q1 2025 to $4.9 million (10.6 percent margin) from $2.1 million (5.1 percent margin) in Q1 2024. Margin was favorably impacted by leverage on higher volume, price increases, and cost reduction efforts, partially offset by inflationary pressures and mix.
  


• 
  Entered Orders increased $20 million (43 percent) to $65 million in Q1 2025. The increase was driven by a strong quarter for EMC Test & Measurement, A&D, and medical and industrial shielding orders. The segment book-to-bill was 1.41x in the quarter and resulted in ending backlog of $177 million.
  
  
  
  
  

Business Outlook – 2025




Beginning in Q1 2025, acquisition related amortization will be excluded from our Adjusted Earnings calculation. Our current assessment of FY 2025 acquisition related amortization does not include the impact of the pending SM&P acquisition. The initial fiscal 2025 guidance issued in our November press release is revised as follows:

Due to strong market conditions and continued improvement in operational performance, we are raising our full-year guidance by $0.25 to a range of $5.55 to $5.75 (16 to 21 percent growth over the prior year) from $5.30 to $5.50. This guidance is in line with our initial revenue guidance range of $1.09 to $1.11 billion (6 to 8 percent annual growth).

Management’s current expectation is for Q2 Adjusted EPS in the range of $1.20 to $1.30, which represents 10 to 19 percent growth over the prior year quarter.

SM&P Acquisition




As announced on July 8, 2024, ESCO has agreed to acquire the Signature Management & Power (SM&P) business of Ultra Maritime for a purchase price of $550 million. The closing of the transaction is subject to certain conditions, including the completion of the regulatory approval processes in the United States (US) and the United Kingdom (UK). The US closing conditions have been met. We are in the final stages of the UK government assessment of the transaction and we are optimistic that the assessment will be positively resolved in the near term. Our current expectation would be to close the transaction either in our second or early in our third fiscal quarter. SM&P’s sole source product offerings will add significant scale to the ESCO Navy business, providing increased content on domestic Navy submarine and surface ship programs and expansion into vital UK and AUKUS navy platforms.

Dividend Payment




The next quarterly cash dividend of $0.08 per share will be paid on April 17, 2025 to stockholders of record on April 2, 2025.

Conference Call




The Company will host a conference call today, February 6, at 4:00 p.m. Central Time, to discuss the Company’s Q1 2025 results. A live audio webcast and an accompanying slide presentation will be available in the

Investor Center

of ESCO’s website. Participants may also access the webcast using this

registration link

. For those unable to participate, a webcast replay will be available after the call in the

Investor Center

of ESCO’s website.

Forward-Looking Statements




Statements in this press release regarding Management’s intentions, expectations and guidance for fiscal 2025, including restructuring and cost reduction actions, sales, orders, revenues, margin, earnings, Adjusted EPS, acquisition related amortization, and any other statements which are not strictly historical, are “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. securities laws.

Investors are cautioned that such statements are only predictions and speak only as of the date of this presentation, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment including but not limited to those described in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and the following: the timing and outcome, if any, of the Company’s strategic alternatives review of VACCO and its Space business; of the Company’s pending acquisition of SM&P; the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars, elections, political changes, tariffs and trade disputes, terrorist activities, cyberattacks or natural disasters on the Company’s operations and those of the Company’s customers and suppliers; disruptions in manufacturing or delivery arrangements due to shortages or unavailability of materials or components or supply chain disruptions; inability to access work sites; the timing and content of future contract awards or customer orders; the timely appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties or data breaches; the availability of acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; material changes in the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and taxation; changes in interest, inflation and employment rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration and performance of acquired businesses.

Non-GAAP Financial Measures




The financial measures EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are presented in this press release. The Company defines “EBIT” as earnings before interest and taxes, “EBITDA” as earnings before interest, taxes, depreciation and amortization, “Adjusted EBIT” and “Adjusted EBITDA” as excluding the net impact of the items described in the attached Reconciliation of Non-GAAP Financial Measures, and “Adjusted EPS” as GAAP earnings per share excluding the net impact of the items described and reconciled in the attached Reconciliation of Non-GAAP Financial Measures.

EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes EBIT, Adjusted EBIT, EBITDA, and Adjusted EBITDA are useful in assessing the operational profitability of the Company’s business segments because they exclude interest, taxes, depreciation, and amortization, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The presentation of EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA, and Adjusted EPS provides important supplemental information to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

About ESCO




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 products and systems; and provides diagnostic instruments, software and services to industrial power users and the electric utility and renewable energy industries. Headquartered in St. Louis, Missouri, ESCO and its subsidiaries have offices and manufacturing facilities worldwide. For more information on ESCO and its subsidiaries, visit the Company’s website at

www.escotechnologies.com

.

SOURCE ESCO Technologies Inc.


Kate Lowrey, Vice President of Investor Relations, (314) 213-7277

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.