Esco Technologies' Q3 Earnings Call Highlights Strong Growth, Record Aerospace Revenue, and Strategic Acquisitions.

Esco Technologies reported a 27% sales growth and 25% adjusted EPS increase in Q3, driven by strong aerospace and test business performances. The company completed a maritime acquisition and divested VACCO, expanding its Navy market presence. However, the utility group experienced a flat quarter, and the renewables market faces uncertainty post-legislation. Esco raised its full-year guidance, projecting over 20% adjusted EPS growth.

Esco Technologies Inc. (NYSE: ESE) reported its third-quarter (Q3) fiscal 2025 results, highlighting significant growth in sales and adjusted earnings per share (EPS), driven by strong performances in the aerospace and test business segments. The company also completed a maritime acquisition and divested VACCO Industries, expanding its presence in the Navy market.

Key Financial Highlights:
- Sales Growth: Sales increased by 27% to $296.3 million compared to $233.6 million in Q3 2024.
- Adjusted EPS Increase: Adjusted EPS from continuing operations rose by 25% to $1.60 per share from $1.28 per share in Q3 2024.
- Orders: Entered orders surged by 194% to $749.0 million, with a book-to-bill ratio of 2.53x, resulting in a record backlog of $1.17 billion.
- Full-Year Guidance: Esco raised its full-year adjusted EPS guidance to $5.75 to $5.90, representing a 21% to 24% growth over the prior year.

Segment Performance:
- Aerospace & Defense (A&D): Sales grew by 56% to $136.3 million, driven by higher Navy and Aerospace sales. Orders increased by 547% to $582 million.
- Utility Solutions Group (USG): Sales increased by 2% to $92.4 million, but EBIT decreased due to inflationary pressures and mix.
- RF Test & Measurement (Test): Sales rose by 21% to $67.7 million, but orders decreased by 6% to $61 million.

Outlook:
Esco's Chief Executive Officer and President, Bryan Sayler, commented, "It has been a transformational period at ESCO as we have focused on integrating ESCO Maritime Solutions and finalizing the divestiture of VACCO Industries. With the completion of these transactions, we have taken an important step forward in the evolution of ESCO. We now have a meaningfully larger Navy business and have exited the space business." The company expects to continue delivering above-market growth and has issued Q4 guidance that once again raises its full-year FY 2025 outlook.

Challenges:
The utility group experienced a flat quarter, and the renewables market faces uncertainty post-legislation. However, the company remains optimistic about its future prospects and is well-positioned in end markets with attractive long-term growth dynamics.

References:
[1] https://finance.yahoo.com/news/esco-reports-third-quarter-fiscal-201500993.html