ESCO Technologies Inc Q3 2025 Earnings Call Highlights: Record Backlog and Strong EPS Growth.

ESCO Technologies Inc reported record backlog of nearly $1.2 billion and raised full-year guidance for over 20% adjusted EPS growth. Aerospace and Defense segment achieved double-digit organic growth with 560 basis points increase in margin. Test business reported 21% growth and improved margins by 350 basis points sequentially. Utility Group experienced flattish quarter and Test segment saw decline in orders by nearly 6%.

ESCO Technologies Inc. (NYSE: ESE) has reported strong financial results for the third quarter of 2025, highlighting significant improvements in its operational performance. The company reported a record backlog of nearly $1.2 billion and raised its full-year guidance for adjusted earnings per share (EPS) growth by over 20%. The Aerospace and Defense segment achieved double-digit organic growth, with a 560 basis point increase in margin. The Test business reported 21% growth and improved margins by 350 basis points sequentially. However, the Utility Group experienced a flattish quarter, and the Test segment saw a decline in orders by nearly 6%.

Key Highlights

- Revenue Growth: ESCO Technologies reported a 27% increase in sales to $296.3 million for Q3 2025, compared to $233.6 million in Q3 2024. This growth was driven by a 56% increase in the Aerospace & Defense segment, which rose to $136.3 million from $87.2 million in the same period last year.

- Adjusted EPS: The company's adjusted EPS from continuing operations increased by 25% to $1.60 per share, compared to $1.28 per share in Q3 2024. However, GAAP EPS from continuing operations decreased by 13% to $0.96 per share due to acquisition costs related to the Maritime acquisition.

- Backlog and Book-to-Bill Ratio: ESCO established a record backlog of $1.17 billion, reflecting a robust book-to-bill ratio of 2.53. The company also entered orders worth $749.0 million in Q3 2025, with a book-to-bill ratio of 2.53x.

- Full-Year Guidance: ESCO raised its full-year revenue and adjusted EPS guidance, indicating confidence in continued growth and operational performance. The updated FY 2025 revenue guidance ranges from $1.075 billion to $1.105 billion, a 17-20% increase.

Segment Performance

- Aerospace & Defense: The segment achieved a 56% increase in sales to $136.3 million, driven by stronger Navy and Aerospace orders. The segment's adjusted EBIT margin improved by 28.8% to 21.1%.

- Utility Solutions Group: Sales in the Utility Solutions Group increased by 2% to $92.4 million. However, the segment's EBIT margin was negatively impacted by inflationary pressures and mix, resulting in a decrease of 0.4%.

- Test Segment: The Test business reported 21% growth but saw a decline in orders by nearly 6%.

Outlook

Bryan Sayler, Chief Executive Officer and President of ESCO Technologies, 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. The impact of these changes can be seen both in our top and bottom line results, as our Sales increased 27%, Adjusted EPS from Continuing Operations increased 25%, and Adjusted EBIT margin increased 180 basis points to 21.1% in the quarter."

References

[1] https://www.quiverquant.com/news/ESCO+Technologies+Inc.+Reports+Strong+Q3+2025+Results+with+Record+Backlog+and+Increased+Sales+Amid+Strategic+Transformation