ESCO Reports Second Quarter Fiscal 2022 Results

Rhea-AI Summary

ESCO Technologies Inc. (NYSE: ESE) reported strong Q2 2022 results with a GAAP EPS of $0.64 and Adjusted EPS of $0.65, up from $0.59 and $0.56 respectively in Q2 2021. Sales increased 23.5% to $205 million driven by a 34% rise in entered orders totaling $236.5 million. The company achieved a record backlog of $671 million. Despite challenges from supply chain issues and inflation, liquidity stands at $546 million, and guidance for 2022 EPS is expected between $3.10 and $3.20.

Positive

• Q2 2022 Adjusted EPS increased 16% to $0.65.
• Sales surged 23.5% to $205 million with notable organic growth.
• Entered orders rose 34% year-over-year leading to a record backlog of $671 million.
• Strong cash flow with $23 million provided by operating activities year-to-date.

Negative

• Operating cash flow negatively impacted by inventory buildup for record backlogs.
• Supply chain disruptions and inflation present ongoing headwinds.

- Q2 GAAP EPS $0.64 and Adjusted EPS $0.65 - Q2 Sales increase 23.5% to $205 Million - $236 Million in Q2 Orders / Book-to-bill of 1.15x -

St. Louis, May 09, 2022 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the second quarter ended March 31, 2022 (Q2 2022) compared to the second quarter ended March 31, 2021 (Q2 2021).

Operating Highlights

• Q2 2022 GAAP EPS was $0.64 per share compared to $0.59 in Q2 2021. Q2 2022 Adjusted EPS increased $0.09 per share (16 percent) to $0.65 per share compared to $0.56 per share in Q2 2021.
• Q2 2022 Sales of $204.9 million increased $39.0 million (23.5 percent) compared to Q2 2021. Organic sales increased $27.3 million (16.5 percent) and recent acquisitions contributed $11.7 million (7.0 percent) of revenue in the quarter.
• Q2 2022 Entered Orders increased $60.2 million (34 percent) over the prior year period to $236.5 million (book-to-bill of 1.15x), resulting in record ending backlog of $671 million.
• Net cash provided by operating activities was $23 million YTD 2022. Operating cash flow was negatively impacted by higher inventories to support record backlogs, supply chain challenges that reduced manufacturing output, and the timing of milestone payments.  
• Net debt (total borrowings less cash on hand) was $142 million, resulting in a 1.27x leverage ratio and $546 million in liquidity at March 31, 2022.
  
  

Vic Richey, Chairman and Chief Executive Officer, commented, “Our global team delivered strong orders, sales, and earnings growth in Q2. I was particularly pleased to see increased activity from our North American utility customers drive revenue growth and margin improvement in our USG segment. In A&D, it was also encouraging to see our Q2 commercial aerospace revenue at the highest level since the beginning of the pandemic. Overall, the combination of meaningful organic growth and the contribution of recent acquisitions helped us deliver record Q2 revenue of $205 million and 16 percent growth in Adjusted EPS.

“The quarter was not without its challenges, as supply chain issues and wage and material cost inflation continue to present headwinds. Our teams continue to work diligently to navigate supply chain issues and implement price increases to offset the impacts of inflation.   These actions enabled us to exceed earnings expectations in the quarter. It is through the hard work and dedication of our employees that we were able overcome these economic disruptions to support our customers and deliver meaningfully improved operating results.

“We continue to see strong entered orders across our commercial aerospace, electric utility, renewables and Test end-markets. Our year-to-date orders of $461 million are up 38% over the prior year, resulting in record backlog which gives us confidence in our ability to deliver our stated revenue and earnings goals for 2022. Our end-market exposure is favorable and we are well-positioned to deliver profitable long-term growth and shareholder value as market demand continues to recover.”

Segment Performance

Aerospace & Defense (A&D)

• Sales increased $2.3 million (3 percent) to $84.8 million in Q2 2022 from $82.5 million in Q2 2021. Commercial aerospace sales increased $7.2 million (30 percent) to $31 million, partially offset by lower Navy and industrial sales at VACCO compared to the prior year quarter.  
• EBIT decreased $2.7 million in Q2 2022 to $14.3 million from $17.0 million in Q2 2021. Adjusted EBIT decreased $2.5 million in Q2 2022 to $14.5 million (17.1 percent margin) from $17.0 million (20.7 percent margin) in Q2 2021. The decrease in margin was driven by lower revenue at VACCO and unfavorable product mix in the aerospace business.   We expect A&D’s continuing order strength and record backlog to drive revenue growth and margin expansion in the second half of the year.
• Entered Orders were $95 million in Q2 2022 (book-to-bill of 1.11x) compared to $88 million in Q2 2021. The order strength was driven by the continuing recovery of commercial aerospace, the 737 production ramp, increased MRO activity, and business jet orders. The 7 percent increase in orders over the prior year quarter resulted in ending backlog of $397 million.
  
  

Utility Solutions Group (USG)

• Sales increased $24.6 million (62 percent) to $64.2 million in Q2 2022 from $39.6 million in Q2 2021. Doble organic sales increased $12.4 million (39.0 percent) as demand from North American utility customers rebounded sharply.   In addition, Phenix and Altanova contributed $10.4 million in revenue and NRG sales increased $1.8 million (23 percent) as the strength in the renewables end-market continues.   
• EBIT increased $4.6 million in Q2 2022 to $11.3 million from $6.7 million in Q2 2021. Adjusted EBIT increased $5.8 million in Q2 2022 to $11.3 million (17.7 percent margin) from $5.5 million (13.8 percent margin) in Q2 2021. The margin increase was primarily driven by leverage on higher revenue and price increases, partially offset by wage and material cost inflation and expenses related to the return of trade shows and customer events.
• Entered Orders were $86 million in Q2 2022 (book-to-bill of 1.35x). Orders increased $43 million (98 percent) over the prior year quarter and resulted in ending backlog of $117 million. Doble core electric utility orders increased $27 million (76 percent) reflecting broad strength across the product portfolio, including a large long-term contract for upgraded Doble Universal Controller™ (DUC) hardware and service, protection testing orders, and service contract renewals. Phenix and Altanova added $13 million, and NRG renewables orders increased $3 million (40 percent) compared to the prior year.
  
  

Test

• Sales increased $12.1 million (28 percent) to $55.9 million in Q2 2022 from $43.8 million in Q2 2021, due to increased volume related to medical shielding, power filters, and test and measurement projects in the U.S and China.
• EBIT increased $2.8 million in Q2 2022 to $8.5 million (15.2 percent margin) from $5.7 million (13.0 percent margin) in Q2 2021.   The increase in profitability was driven by higher volume and price increases, which more than offset material cost and wage inflation.
• Entered Orders were $55 million in Q2 2022 (book-to-bill of .99x) compared to $44 million in Q2 2021. The order growth was driven by domestic medical shielding and global demand for test and measurement projects.   The $11 million (25 percent) increase in Q2 2022 orders resulted in an ending backlog of $157 million.
  
  

Share Repurchase Program
As previously announced in our August 9, 2021 press release, the Company’s Board of Directors approved a new stock repurchase program. During Q2 2022, the Company repurchased approximately 113,000 shares for $8 million. As of March 31, 2022, the Company has repurchased approximately 229,000 shares for $18 million.

Dividend Payment
The next quarterly cash dividend of $0.08 per share will be paid on July 19, 2022 to stockholders of record on July 5, 2022.

Board of Directors
Effective May 4, 2022, the Company added an additional independent director, Janice L. Hess, to the Company’s Board of Directors. She was also named to the Nominating and Corporate Governance Committee of the Board of Directors.

Since 2014, Ms. Hess has been the President of the Engineered Systems Segment (ESS) and Teledyne Brown Engineering of Teledyne Technologies Incorporated (NYSE:TDY), a diversified multinational company which provides enabling technologies for industrial growth markets that require advanced technology and high reliability. She has full responsibility for ESS strategic positioning, growth, and profitability. Serving energy, space, maritime, and defense markets, ESS designs, develops and delivers a diverse array of advanced technology-driven solutions, systems, products, and services for complex and harsh environments.   She previously served in a number of positions of increasing financial, operational, and executive responsibility with Teledyne from 2000 to 2014, including as ESS’s Executive Vice President and Chief Financial Officer.

She was selected to serve on the Company’s Board on the basis of her four decades of operational, financial, and leadership experience, her commitment to continuous improvement, and her performance in growing traditional, adjacent, and emerging markets similar to those served by the Company, which will enable her to assist the Board in guiding Company strategy at the highest level.  

Ms. Hess has a BSBA in Accounting from Auburn University. She holds a Certificate in Management from the University of Virginia’s Darden Graduate School of Business, as well as a professional designation in Advanced Government Contracting. She is a Certified Public Accountant in Alabama (inactive) and a graduate of Leadership Alabama.

Business Outlook – 2022
Management’s expectations for 2022 remain consistent with the details outlined in our November 18, 2021 release.  Our 2022 guidance represents meaningful growth in sales, Adjusted EBIT, and Adjusted EBITDA across each of the Company’s business segments.

Our year-to-date results have generally matched our expectations as presented in November. Consistent with prior years and our November guidance, our revenue and earnings will be more second half weighted and reflect a significant ramp compared to the first half of the year. With solid backlog driving revenue growth and improving margins, we are on track to deliver our stated goal for the year of adjusted earnings per share in the range of $3.10 to $3.20. Our expectation is for Q3 Adjusted EPS in the range of $0.84 to $0.91 per share, representing growth of 25 to 35 percent over the prior year.

Conference Call
The Company will host a conference call today, May 9, at 4:00 p.m. Central Time, to discuss the Company’s Q2 2022 results. A live audio webcast and an accompanying slide presentation will be available on the Company’s website at https://investor.escotechnologies.com. A replay of the conference call will be available on the Company’s website noted above or by phone (dial 1-855-859-2056 and enter the pass code 9495619).

Forward-Looking Statements
Statements in this press release regarding the timing and magnitude of recovery in the Company’s end markets, the continuing impacts of COVID-19 on the Company’s results, sales, Adjusted SG&A, Adjusted EBIT, Adjusted EBITDA, Adjusted EPS, cash flow, results of cost reduction efforts, margins, growth, the financial success of the Company, the strength of its end markets, the outlook for the A&D, Test and USG segments, the ability to increase shareholder value, the timing and success of acquisition efforts, internal investments in new products and solutions, the impacts of inflation, the long-term success of the Company, and any other statements which are not strictly historical are “forward-looking” statements within the meaning of the safe harbor provisions of the federal securities laws.

Investors are cautioned that such statements are only predictions and speak only as of the date of this release, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment including but not limited to those described in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021; the availability and acceptance of viable COVID-19 vaccines by enough of the U.S. and world’s population to curtail the pandemic; the continuing impact of the COVID-19 pandemic and the effects of known or unknown COVID-19 variants including labor shortages, facility closures, shelter in place policies or quarantines, material shortages, transportation delays, termination or delays of Company contracts, and the inability of our suppliers or customers to perform; the impacts of Executive Order 14042 and other vaccine mandates on our employees and businesses; the impacts of natural disasters on the Company’s operations and those of the Company’s customers and suppliers; the timing and content of future contract awards or customer orders; the appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; the success of the Company’s acquisition efforts; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; changes in the costs and availability of certain raw materials; labor disputes; changes in U.S. tax laws and regulations; other changes in laws and regulations including but not limited to changes in accounting standards and foreign taxation; changes in interest rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration of recently acquired businesses.

Non-GAAP Financial Measures
The financial measures EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS are presented in this press release. The Company defines “EBIT” as earnings before interest and taxes, “EBITDA” as earnings before interest, taxes, depreciation and amortization, “Adjusted EBIT” and “Adjusted EBITDA” as excluding the net impact of the items described in the attached Reconciliation of Non-GAAP Financials Measures, and “Adjusted EPS” as GAAP earnings per share (EPS) excluding the net impact of the items described and reconciled in the attached Reconciliation of Non-GAAP Financial Measures, which were ($0.01) per share in Q2 2022.

EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA are useful in assessing the operational profitability of the Company’s business segments because they exclude interest, taxes, depreciation and amortization, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The presentation of EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS provides important supplemental information to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

ESCO, headquartered in St. Louis, Missouri: Manufactures highly-engineered filtration and fluid control products for the aviation, Navy, space and process markets worldwide, as well as composite-based products and solutions for Navy, defense and industrial customers; is the industry leader in RF shielding and EMC test products; and provides diagnostic instruments, software and services for the benefit of industrial power users and the electric utility and renewable energy industries. Further information regarding ESCO and its subsidiaries is available on the Company’s website at www.escotechnologies.com.

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
						Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
Net Sales					$	204,928				165,894
Cost and Expenses:
		Cost of sales				128,375				103,553
		Selling, general and administrative expenses				47,959				38,746
		Amortization of intangible assets				6,510				4,917
		Interest expense				1,020				432
		Other (income) expenses, net				(604	)			(1,903	)
			Total costs and expenses			183,260				145,745
Earnings before income taxes						21,668				20,149
Income tax expense						5,085				4,745
			Net earnings		$	16,583				15,404
			Diluted EPS:
			Diluted - GAAP
				Net earnings	$	0.64				0.59
			Diluted - As Adjusted Basis
				Net earnings	$	0.65		(1	)	0.56		(2	)
			Diluted average common shares O/S:			26,045				26,201
(1	)	Q2 2022 Adjusted EPS excludes $0.01 per share of after-tax charges associated with the NEco acquisition inventory step-up charge and Corporate acquisition related costs.
(2	)	Q2 2021 Adjusted EPS excludes $0.03 per share of after-tax income associated with the final settlement from the sale of the Doble Watertown facility partially offset by charges related to the Doble Manta facility consolidation.

   

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
						Six Months Ended March 31, 2022				Six Months Ended March 31, 2021
Net Sales					$	381,938				328,568
Cost and Expenses:
		Cost of sales				236,680				203,175
		Selling, general and administrative expenses				94,594				79,746
		Amortization of intangible assets				12,977				9,865
		Interest expense				1,753				973
		Other (income) expenses, net				(571	)			(1,880	)
			Total costs and expenses			345,433				291,879
Earnings before income taxes						36,505				36,689
Income tax expense						8,398				8,467
			Net earnings		$	28,107				28,222
			Diluted EPS:
			Diluted - GAAP
				Net earnings	$	1.08				1.08
			Diluted - As Adjusted Basis
				Net earnings	$	1.11		(1	)	1.08		(2	)
			Diluted average common shares O/S:			26,098				26,192
(1	)	YTD Q2 2022 Adjusted EPS excludes $0.03 per share of after-tax charges associated with the Altanova & NEco acquisition inventory step-up charges and Corporate acquisition related costs.
(2	)	YTD Q2 2021 Adjusted EPS excludes after-tax income associated with the final settlement from the sale of the Doble Watertown facility offset by charges related to the Doble Manta facility consolidation and ATM acquisition inventory step-up.

   

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)
				GAAP						As Adjusted
				Q2 2022			Q2 2021			Q2 2022			Q2 2021
Net Sales
	Aerospace & Defense		$	84,821			82,528			84,821			82,528
	USG			64,191			39,555			64,191			39,555
	Test			55,916			43,811			55,916			43,811
		Totals	$	204,928			165,894			204,928			165,894
EBIT
	Aerospace & Defense		$	14,349			17,006			14,489			17,046
	USG			11,314			6,725			11,331			5,461
	Test			8,494			5,688			8,494			5,688
	Corporate			(11,469	)		(8,838	)		(11,344	)		(8,548	)
		Consolidated EBIT		22,688			20,581			22,970			19,647
		Less: Interest expense		(1,020	)		(432	)		(1,020	)		(432	)
		Less: Income tax expense		(5,085	)		(4,745	)		(5,150	)		(4,530	)
		Net earnings	$	16,583			15,404			16,800			14,685
Note 1: Adjusted net earnings were $16.8 million in Q2 2022 which excludes $0.01 per share of after-tax charges associated with the NEco acquisition inventory step-up charge and Corporate acquisition related costs.
Note 2: Adjusted net earnings were $14.7 million in Q2 2021 which excludes $0.03 per share of after-tax income associated with the final settlement from the sale of the Doble Watertown facility partially offset by charges related to the Doble Manta facility consolidation.
EBITDA Reconciliation to Net earnings:										Adjusted			Adjusted
				Q2 2022			Q2 2021			Q2 2022			Q2 2021
Consolidated EBITDA			$	34,808			30,684			35,090			29,750
Less: Depr & Amort				(12,120	)		(10,103	)		(12,120	)		(10,103	)
Consolidated EBIT				22,688			20,581			22,970			19,647
Less: Interest expense				(1,020	)		(432	)		(1,020	)		(432	)
Less: Income tax expense				(5,085	)		(4,745	)		(5,150	)		(4,530	)
Net earnings			$	16,583			15,404			16,800			14,685

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)
				GAAP						As Adjusted
				YTD Q2			YTD Q2			YTD Q2			YTD Q2
				2022			2021			2022			2021
Net Sales
	Aerospace & Defense		$	155,065			149,144			155,065			149,144
	USG			127,676			94,095			127,676			94,095
	Test			99,197			85,329			99,197			85,329
		Totals	$	381,938			328,568			381,938			328,568
EBIT
	Aerospace & Defense		$	24,304			25,266			24,639			25,626
	USG			24,705			19,456			25,172			18,842
	Test			12,459			11,030			12,459			11,030
	Corporate			(23,210	)		(18,090	)		(22,905	)		(17,740	)
		Consolidated EBIT		38,258			37,662			39,365			37,758
		Less: Interest expense		(1,753	)		(973	)		(1,753	)		(973	)
		Less: Income tax		(8,398	)		(8,467	)		(8,653	)		(8,489	)
		Net earnings	$	28,107			28,222			28,959			28,296
Note 1: Adjusted net earnings were $29.0 million in YTD Q2 2022 which excludes $0.03 per share of after-tax charges associated with the Altanova & NEco acquisition inventory step-up charges and Corporate acquisition related costs.
Note 2: Adjusted net earnings were $28.3 million in YTD Q2 2021 which excludes income from the final settlement on the sale of the Doble Watertown facility offset by charges related to the Doble Manta facility consolidation and ATM acquisition inventory step-up.
EBITDA Reconciliation to Net earnings:										Adjusted			Adjusted
				YTD Q2			YTD Q2			YTD Q2			YTD Q2
				2022			2021			2022			2021
Consolidated EBITDA			$	62,550			57,777			63,657			57,873
Less: Depr & Amort				(24,292	)		(20,115	)		(24,292	)		(20,115	)
Consolidated EBIT				38,258			37,662			39,365			37,758
Less: Interest expense				(1,753	)		(973	)		(1,753	)		(973	)
Less: Income tax expense				(8,398	)		(8,467	)		(8,653	)		(8,489	)
Net earnings			$	28,107			28,222			28,959			28,296

      

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
				March 31, 2022		September 30, 2021
Assets
	Cash and cash equivalents		$	54,324		56,232
	Accounts receivable, net			140,497		146,341
	Contract assets			111,453		93,771
	Inventories			175,152		147,148
	Other current assets			31,972		22,662
		Total current assets		513,398		466,154
	Property, plant and equipment, net			156,963		154,265
	Intangible assets, net			407,203		409,250
	Goodwill			508,406		504,853
	Operating lease assets			30,139		31,846
	Other assets			9,677		10,977
			$	1,625,786		1,577,345
Liabilities and Shareholders' Equity
	Current maturities of long-term debt		$	20,000		20,000
	Accounts payable			71,811		56,669
	Contract liabilities			108,629		106,045
	Other current liabilities			77,355		92,281
		Total current liabilities		277,795		274,995
	Deferred tax liabilities			82,187		73,560
	Non-current operating lease liabilities			26,302		28,032
	Other liabilities			42,329		47,062
	Long-term debt			176,000		134,000
	Shareholders' equity			1,021,173		1,019,696
			$	1,625,786		1,577,345

   

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
		Six Months Ended March 31, 2022			Six Months Ended March 31, 2021
Cash flows from operating activities:
Net earnings	$	28,107			28,222
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization		24,292			20,115
Stock compensation expense		3,428			2,745
Changes in assets and liabilities		(41,451	)		9,179
Gain on sale of building and land		0			(1,950	)
Effect of deferred taxes		8,627			(989	)
Net cash provided by operating activities		23,003			57,322
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(15,592	)		(6,684	)
Capital expenditures		(20,715	)		(13,153	)
Additions to capitalized software		(4,727	)		(3,973	)
Proceeds from sale of building and land		0			1,950
Net cash used by investing activities		(41,034	)		(21,860	)
Cash flows from financing activities:
Proceeds from long-term debt		88,000			34,000
Principal payments on long-term debt and short-term borrowings		(46,000	)		(74,368	)
Dividends paid		(4,150	)		(4,167	)
Purchases of common stock into treasury		(17,878	)		0
Other		(2,719	)		0
Net cash provided (used) by financing activities		17,253			(44,535	)
Effect of exchange rate changes on cash and cash equivalents		(1,130	)		2,166
Net (decrease) increase in cash and cash equivalents		(1,908	)		(6,907	)
Cash and cash equivalents, beginning of period		56,232			52,560
Cash and cash equivalents, end of period	$	54,324			45,653

   

   

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data (Unaudited)
(Dollars in thousands)
Backlog And Entered Orders - Q2 2022				Aerospace & Defense			USG			Test			Total
	Beginning Backlog - 1/1/22		$	387,173			94,382			157,844			639,399
	Entered Orders			94,550			86,485			55,443			236,478
	Sales			(84,821	)		(64,191	)		(55,916	)		(204,928	)
	Ending Backlog - 3/31/22		$	396,902			116,676			157,371			670,949
Backlog And Entered Orders - YTD Q2 2022				Aerospace & Defense			USG			Test			Total
	Beginning Backlog - 10/1/21		$	367,216			91,631			133,176			592,023
	Entered Orders			184,751			152,721			123,392			460,864
	Sales			(155,065	)		(127,676	)		(99,197	)		(381,938	)
	Ending Backlog - 3/31/22		$	396,902			116,676			157,371			670,949

      

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
EPS – Adjusted Basis Reconciliation – Q2 2022
	EPS – GAAP Basis – Q2 2022	$	0.64
	Adjustments (defined below)		0.01
	EPS – As Adjusted Basis – Q2 2022	$	0.65
	Adjustments exclude $0.01 per share consisting of NEco acquisition inventory
	step-up charges and Corporate related acquisition costs in the second quarter of 2022.
	The $0.01 of EPS adjustments per share consists of $282K of pre-tax charges
	offset by $65K of tax benefit for net impact of $217K.
EPS – Adjusted Basis Reconciliation – Q2 2021
	EPS GAAP Basis – Q2 2021	$	0.59
	Adjustments (defined below)		(0.03	)
	EPS – As Adjusted Basis – Q2 2021	$	0.56
	Adjustments exclude $0.03 per share consisting of income associated with the final
	settlement from the sale of the Doble Watertown facility partially offset by charges
	related to the Doble Manta facility consolidation in the second quarter of 2021.
	The $0.03 of EPS adjustments per share consists of $934K of pre-tax income
	offset by $215K of tax expense for net impact of $719K.
EPS – Adjusted Basis Reconciliation – YTD Q2 2022
	EPS – GAAP Basis – YTD Q2 2022	$	1.08
	Adjustments (defined below)		0.03
	EPS – As Adjusted Basis – YTD Q2 2022	$	1.11
	Adjustments exclude $0.03 per share consisting of Altanova & NEco acquisition inventory
	step-up charges and Corporate related acquisition costs in the first six months of 2022.
	The $0.03 of EPS adjustments per share consists of $1,107K of pre-tax charges
	offset by $255K of tax benefit for net impact of $852K.

    
SOURCE ESCO Technologies Inc.
Kate Lowrey, Vice President of Investor Relations, (314) 213-7277

FAQ

What were ESCO Technologies' Q2 2022 earnings results?

ESCO Technologies reported a GAAP EPS of $0.64 and an Adjusted EPS of $0.65 for Q2 2022.

How much did ESCO Technologies' sales increase in Q2 2022?

Sales increased by 23.5% to $205 million in Q2 2022.

What is the forward guidance for ESCO Technologies' EPS in 2022?

The company expects adjusted EPS in the range of $3.10 to $3.20 for 2022.

What was the book-to-bill ratio for ESCO Technologies in Q2 2022?

The book-to-bill ratio was 1.15x in Q2 2022.

What challenges did ESCO Technologies face in Q2 2022?

The company faced supply chain issues and inflation impacting its operating cash flow.