ESCO Raises Outlook as Orders Strengthen
The engineered-products maker lifted its fiscal-year adjusted EPS forecast to $8.30 to $8.40.
ESCO Technologies (ESE) reported fiscal third-quarter adjusted earnings of $2.20 a share, up 38% from a year earlier, as revenue rose 14% to $339 million.
Growth moderated after revenue gains of 33.5% in the second quarter and 35.0% in the first. Organic sales growth slowed to 8% from 12.8% and 11.4%, respectively, as Maritime’s quarterly contribution declined to $23 million from $48 million in the second quarter and $51 million in the first.
Adjusted earnings growth also eased from 63.2% in the second quarter and 72.6% in the first, though adjusted EPS increased sequentially from $1.91 and $1.64. GAAP earnings from continuing operations rose 31% to $1.26 a share but slipped from $1.29 in the second quarter.
Aerospace & Defense sales increased 23% to $168.2 million, including 9% organic growth and $22.7 million from Maritime. The segment’s adjusted EBIT margin rose 120 basis points to 30.0%, extending its sequential climb as higher volume and pricing outweighed inflation and unfavorable mix.
Utility Solutions Group revenue rose 8% to $100.0 million, accelerating from gains of 3% in the second quarter and 1% in the first as Doble grew 17%. NRG sales fell 29% on lower renewables revenue, and the segment’s adjusted EBIT margin narrowed to 22.3% from 23.6% a year earlier and 24.7% in the preceding quarter.
Orders pointed to stronger demand beyond the quarter. Utility Solutions orders rose 20% to $126.9 million, while RF Test & Measurement orders jumped 42% to $87.0 million on industrial shielding projects and electromagnetic-interference filters for U.S. data centers. RF Test’s book-to-bill ratio reached 1.23 and its backlog hit a record $248.6 million.
Companywide orders totaled $409.5 million, up 8% sequentially, and backlog reached a record $1.54 billion. Aerospace & Defense orders fell 66% against a prior-year period that included acquired Maritime backlog and large submarine orders, though the segment posted a 1.16 book-to-bill ratio and record backlog of $1.1 billion.
ESCO’s fiscal-year adjusted EPS forecast is $8.30 to $8.40, up from $8.00 to $8.25 in May, while its sales outlook is $1.30 billion to $1.33 billion. Fourth-quarter adjusted EPS guidance is $2.55 to $2.65, implying growth of 10% to 14%. Year-to-date operating cash flow from continuing operations more than doubled to $193.4 million. Adjusted-EPS exclusions widened to $0.94 a share, including $0.39 tied to Megger financing and acquisition costs.