ESCO Technologies Raises Revenue Guidance Amid Lower Q3 Earnings

ESCO Technologies reported Q3 sales of $296.34 million, up from last year, and updated full-year 2025 revenue guidance to $1.075 to $1.105 billion. Despite lower net income and EPS, year-to-date profits and revised annual revenue expectations indicate a stronger forward outlook for the business. The raised revenue guidance reinforces management's confidence in operating momentum and long-term growth trends.

ESCO Technologies (NYSE:ESE) reported its third-quarter fiscal 2025 results, showcasing a strong operational performance despite missing revenue and earnings estimates. The company's Q3 sales reached $296.3 million, marking a 27% increase year-over-year (YoY) [1]. Although this figure fell short of the $318.6 million GAAP revenue estimate, it reflects a robust expansion in new orders and a record backlog.

The company's non-GAAP earnings per share (EPS) climbed 25% to $1.60, although it missed the $1.65 consensus estimate. GAAP EPS, however, declined 13.0% to $0.96, largely due to acquisition-related costs and timing impacts [1]. Despite the lower earnings, the quarter demonstrated significant year-over-year growth and strategic momentum.

ESCO Technologies also reported a surge in orders, with new orders increasing 194% to $749.0 million, pushing the backlog to a new record of $1.17 billion [1]. The Aerospace & Defense segment was a standout performer, with sales growth of 56% and orders surging 547%, partially driven by the acquisition of Maritime Solutions [1].

The company's full-year 2025 revenue guidance was raised to $1.075 billion to $1.105 billion, up from the prior range, reflecting growth of 17% to 20% over the previous year [1]. Adjusted EPS guidance was increased to $5.75 to $5.90 for FY2025, indicating a targeted growth of 21% to 24% compared to FY2024. For Q4 FY2025, management expects Non-GAAP EPS to be between $2.04 and $2.19, an increase of 14% to 22% versus the prior-year quarter [1].

While GAAP EPS declined, the company's operating cash flows improved, with net operating cash from continuing operations year-to-date at $88 million, up $25 million from the prior year [1]. However, leverage increased as ESCO funded the Maritime acquisition, raising long-term debt to $505 million as of June 30, 2025, from $102 million as of September 30, 2024 [1].

Investors and financial professionals should closely monitor ESCO Technologies' ability to integrate new businesses efficiently, balance higher debt and acquisition costs, and maintain strong government contract strength. The company's forward outlook suggests continued growth momentum, but challenges remain in managing cost pressures, including tariffs and inflation.

References:
[1] https://www.aol.com/finance/esco-ese-q3-232128901.html