ESCO Technologies' Q3 2025 Earnings Call: Navigating Contradictions in Navy Deliveries, VACCO Impact, and A&D Margins

Delivery pace for Navy orders, impact of VACCO acquisition, defense orders and delivery pace, utility segment performance and impact on revenue outlook, and A&D margins and inflation are the key contradictions discussed in ESCO Technologies' latest 2025Q3 earnings call.



Aerospace & Defense Segment Performance:
- The Aerospace & Defense segment achieved double-digit organic growth, with aerospace revenue up almost 20% in the quarter and 15% year-to-date.
- Growth was driven by strong demand for commercial and defense aircraft and increasing production rates.

Maritime Acquisition Impact:
- The Maritime acquisition contributed to a significant increase in backlog, reaching nearly $1.2 billion.
- The addition of Maritime's signature and power management solutions expanded ESCO's presence in the Navy market, which is expected to drive long-term growth.

Test Segment Recovery:
- The Test segment reported 21% revenue growth over the prior year and 15% year-to-date, with margins improving by 350 basis points sequentially.
- This recovery is attributed to cost reduction efforts and improvements in test and measurement, industrial shielding, and services sales.

Utility Solutions Group Challenges:
- The Utility Solutions Group experienced a bit of a flattish quarter in sales and margins, although orders were strong with 5.5% growth in the quarter.
- The group faces challenges due to uncertainty in the renewables market, but the Doble business remains a critical partner for utility asset maintenance and expansion.