8-K - ESE - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

May 9, 2024

ESCO TECHNOLOGIES INC.

(Exact Name of Registrant as Specified in Charter)

Missouri	1-10596	43-1554045
(State or Other	(Commission	(I.R.S. Employer
Jurisdiction of Incorporation)	File Number)	Identification No.)
9900A Clayton Road, St. Louis, Missouri	63124-1186
---	---
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including

area code: 314-213-7200

Securities registered pursuant to section 12(b) of the Act:

		Name of each exchange
Title of each class	Trading Symbol(s)	on which registered
Common Stock, par value $0.01 per share	ESE	New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b))

¨ Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.113d-4 (c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02	Results of Operations and Financial Condition

Item 7.01	Regulation FD Disclosure

Today, May 9, 2024, the Registrant is issuing a press release (furnished as Exhibit 99.1 to this report) announcing its fiscal 2024 second quarter financial and operating results. The press release will be posted on the Registrant’s investor website (https://investor.escotechnologies.com), although the Registrant reserves the right to discontinue that availability at any time.

The Registrant will conduct a related webcast conference call today at 4:00 p.m. Central Time. The conference call webcast will be available on the Registrant’s investor website (https://investor.escotechnologies.com). A slide presentation will be utilized during the call and will be posted on the website prior to the call. For those unable to participate, a webcast replay will be available after the call on the website, although the Registrant reserves the right to discontinue that availability at any time.

Item 9.01	Financial Statements and Exhibits
(d)	Exhibits
---	---
Exhibit No.	Description of Exhibit
---	---
99.1	Press Release dated May 9, 2024
104	Cover Page Inline Interactive Data File

Other Matters

The information in this report furnished pursuant to Item 2.02 and Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (“Exchange Act”) or otherwise subject to the liabilities of that section, unless the Registrant incorporates it by reference into a filing under the Securities Act of 1933 as amended or the Exchange Act.

Any references to the Registrant’s website address in this Form 8-K and the press release are included only as inactive textual references, and the Registrant does not intend them to be active links to its website. Information contained on the Registrant’s website does not constitute part of this Form 8-K or the press release.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 9, 2024
	ESCO TECHNOLOGIES INC.
	By:	/s/Christopher L. Tucker
		Christopher L. Tucker
		Senior Vice President and Chief Financial Officer

Exhibit 99.1

NEWS FROM

For more information contact:

Kate Lowrey- VP of Investor Relations

(314) 213-7277**/ klowrey@escotechnologies.com**

ESCO****REPORTS SECOND QUARTER FISCAL 2024 RESULTS

- Q2 Sales increase 9% to $249 Million -

- Q2 GAAP EPS increases 30% to $0.90 -

- Q2 Adjusted EPS increases 24% to $0.94-

ST. LOUIS, May 9, 2024 – ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today reported its operating results for the second quarter ended March 31, 2024 (Q2 2024).

OperatingHighlight****s

●	Q2 2024 Sales increased $20.0 million (9 percent) to $249.1 million compared to $229.1 million in Q2 2023. Q2 organic sales increased<br>$17.8 million (8 percent) and the MPE acquisition contributed $2.2 million (1 percent) of revenue in the quarter.
●	Q2 2024 GAAP EPS increased 30 percent to $0.90 per share compared to $0.69 per share in Q2 2023. Q2 2024 Adjusted EPS increased 24<br>percent to $0.94 per share compared to $0.76 per share in Q2 2023.
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●	Q2 2024 Entered Orders decreased $12.5 million (5 percent) compared to the prior year period to $239.1 million (book-to-bill of 0.96x),<br>resulting in ending backlog of $838 million.
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●	Net cash provided by operating activities was $19 million YTD, an increase of $25 million compared to the prior year period, as cash<br>flow was positively impacted by lower accounts receivable balances and higher earnings.
---	---
●	Net debt (total borrowings less cash on hand) was $132 million, resulting in a 0.86x leverage ratio and $553 million in liquidity<br>as of March 31, 2024.
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Bryan Sayler, Chief Executive Officer and President, commented, “Q2 was a solid quarter highlighted by both top and bottom-line growth. Revenue grew 9 percent as we continue to see favorable dynamics in our key aerospace, Navy and utility end markets. The sales performance translated to the bottom line very well as Adjusted EPS increased 24 percent compared to the prior year quarter.”

Segment Performance

Aerospace & Defense (A&D)

●	Sales increased $15.7 million (16 percent) to $114.7 million in Q2 2024 from $99.0 million in Q2 2023. Sales growth was driven by<br>strength across Navy, commercial aerospace, and defense aerospace programs.
●	Q2 2024 EBIT increased $4.6 million to $23.4 million from $18.8 million in Q2 2023. Adjusted EBIT increased $4.0 million in Q2 2024<br>to $23.6 million (20.6 percent margin) from $19.6 million (19.8 percent margin) in Q2 2023. Margin improvement was driven by leverage<br>on revenue growth and price increases, partially offset by inflationary pressures and mix.
---	---
●	Entered Orders increased $4 million (4 percent) to $116 million in Q2 2024 compared to $112 million in Q2 2023. The increase in orders<br>was primarily driven by strength in OEM and aftermarket orders for both commercial and defense aerospace. The orders in the quarter resulted<br>in a segment book-to-bill of 1.01x and ending backlog of $562 million.
---	---

Utility Solutions Group (USG)

●	Sales increased $8.1 million (10 percent) to $87.3 million in Q2 2024 from $79.2 million in Q2 2023. Doble’s sales increased<br>by $6.3 million (10 percent) driven by a strong quarter for services and cybersecurity/compliance (DUCe) solutions. NRG sales increased<br>$1.8 million (13 percent) driven by higher demand for solar products.
●	EBIT increased $3.5 million (25 percent) in Q2 2024 to $17.6 million (20.1 percent margin) from $14.1 million (17.8 percent margin)<br>in Q2 2023. There were no adjustments in either period. Margin improvement was driven by mix from increased service business, leverage<br>on revenue growth, and price increases, partially offset by inflationary pressures.
---	---
●	Entered Orders decreased $6 million (7 percent) to $79 million in Q2 2024. Orders were down slightly at Doble and continued to moderate<br>at NRG. NRG’S orders were extremely strong in FY’23 driven by a unique surge related to large orders at extended lead-times<br>as customers managed supply chain concerns and order activity related to Inflation Reduction Act spending. We expect orders for the renewables<br>business to rebound as the market digests last year’s elevated activity level and new projects are defined and implemented. The<br>segment book-to-bill was 0.91x in the quarter, resulting in ending backlog of $119 million.
---	---

RF Test & Measurement (Test)

●	Sales decreased $3.9 million (8 percent) to $47.1 million in Q2 2024 from $51.0 million in Q2 2023. Organic sales decreased $6.1 million<br>primarily related to lower wireless, filters and acoustic volume, partially offset by $2.2 million of revenue related to the MPE acquisition<br>which was completed in Q1 2024.
●	In line with our prior communication, our Test Segment’s revenue continued to be somewhat soft in Q2. While sales were down compared to<br>the prior year, they increased 16 percent sequentially.
●	EBIT decreased $1.7 million in Q2 2024 to $5.5 million from $7.2 million in Q2 2023. Adjusted EBIT decreased $1.5 million in Q2 2024<br>to $5.7 million (12.2 percent margin) from $7.2 million (14.2 percent margin) in Q2 2023. Margin was impacted by lower volume and inflationary<br>pressures, largely mitigated by price increases and cost reduction actions.
---	---
●	Entered Orders decreased $11 million (21 percent) to $44 million in Q2 2024. The decrease was primarily related to lower wireless<br>demand and delays on a few large projects, partially offset by higher OTC filter, MPE, and services orders. The segment book-to-bill was<br>0.93x in the quarter, resulting in ending backlog of $156 million.
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Share Repurchase Program

During Q2 2024, the Company repurchased approximately 72,000 shares for $7.2 million.

Dividend****Payment

The next quarterly cash dividend of $0.08 per share will be paid on July 19, 2024 to stockholders of record on July 3, 2024.

Business****Outlook – 2024

Year-to-date performance has tracked to expectations and full year adjusted earnings per share guidance is being maintained in the range of $4.15 to $4.30 (12 to 16 percent growth). This represents ESCO’s third year in a row of double-digit earnings growth. This outlook is based on sales in line with our initial guidance range of $1.02 to $1.04 billion (7 to 9 percent annual growth). Management’s expectation is for Q3 Adjusted EPS in the range of $1.16 to $1.22.

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 2024 results. A live audio webcast and an accompanying slide presentation will be available on ESCO’s investor website. For those unable to participate, a webcast replay will be available after the call on ESCO’s investor website.

Forward-Looking Statements

Statements in this press release regarding Management’s intentions, expectations and guidance for fiscal 2024, including restructuring and cost reduction efforts, sales, orders, revenues, margin, earnings, Adjusted EPS, and any other statements which are not strictly historical, are “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. 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, 2023 and the following: the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars, elections, political changes, tariffs and trade disputes, terrorist activities, cyberattacks or natural disasters on the Company’s operations and those of the Company’s customers and suppliers; disruptions in manufacturing or delivery arrangements due to shortages or unavailability of materials or components or supply chain disruptions; inability to access work sites; the timing and content of future contract awards or customer orders; the timely 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 or data breaches; the availability of selected acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; material changes in the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and taxation; changes in interest, inflation and employment 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 and performance 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 Financial Measures, and “Adjusted EPS” as GAAP earnings per share excluding the net impact of the items described and reconciled in the attached Reconciliation of Non-GAAP Financial Measures.

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 is a global provider of highly engineered products and solutions serving diverse end-markets. It manufactures filtration and fluid control products for the aviation, Navy, space, and process markets worldwide and composite-based products and solutions for Navy, defense, and industrial customers. ESCO is an industry leader in designing and manufacturing RF test and measurement products and systems; and provides diagnostic instruments, software and services to industrial power users and the electric utility and renewable energy industries. Headquartered in St. Louis, Missouri, ESCO and its subsidiaries have offices and manufacturing facilities worldwide. For more information on ESCO and its subsidiaries, visit 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<br><br> Months<br> Ended<br> March 31, <br><br>2024
Net Sales	$	249,129		229,136
Cost and Expenses:
Cost of sales		152,347		142,296
Selling, general and administrative expenses		55,097		53,877
Amortization of intangible assets		8,572		7,030
Interest expense		3,226		2,269
Other expenses (income), net		666		314
Total costs and expenses		219,908		205,786
Earnings before income taxes		29,221		23,350
Income tax expense		6,002		5,472
Net earnings	$	23,219		17,878
Earnings Per Share (EPS)
Diluted - GAAP	$	0.90		0.69
Diluted - As Adjusted Basis	$	0.94	(1)	0.76	(2)
Diluted average common shares O/S:		25,847		25,895
(1)	Q2 2024 Adjusted<br> EPS excludes $0.04 per share of after-tax charges consisting of: $0.02 of MPE acquisition backlog charges and $0.02 of restructuring<br> charges (primarily severance) within the Test and A&D segments.
---	---
(2)	Q2 2023 Adjusted EPS excludes<br> $0.07 per share of after-tax charges consisting of: $0.04 of executive management transition costs at Corporate, $0.02 of CMT acquisition<br> inventory step-up charges and $0.01 of restructuring charges within the A&D segment.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share amounts)

	Six Months<br> Ended<br> March 31,<br><br> 2024
Net Sales	$	467,443		434,637
Cost and Expenses:
Cost of sales		286,498		268,679
Selling, general and administrative expenses		109,065		105,179
Amortization of intangible assets		16,440		13,891
Interest expense		5,893		3,927
Other expenses (income), net		872		712
Total costs and expenses		418,768		392,388
Earnings before income taxes		48,675		42,249
Income tax expense		10,287		9,644
Net earnings	$	38,388		32,605
Earnings Per Share (EPS)
Diluted - GAAP	$	1.49		1.26
Diluted - As Adjusted Basis	$	1.56	(1)	1.36	(2)
Diluted average common shares O/S:		25,846		25,919
(1)	YTD Q2 2024 Adjusted EPS excludes $0.07 per share of after-tax<br> charges consisting of: $0.05 of MPE acquisition backlog and inventory step-up charges and acquisition costs and $0.02 of restructuring<br> charges (primarily severance) within the Test and A&D segments.
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(2)	YTD Q2 2023 Adjusted EPS excludes<br> $0.10 per share of after-tax charges consisting of: $0.06 of executive management transition costs at Corporate, $0.02 of CMT acquisition<br> inventory step-up charges and $0.02 of restructuring charges within the A&D segment.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Business Segment Information (Unaudited)

(Dollars in thousands)

	GAAP
		Q2 2024		Q2 2023		Q2 2024		Q2 2023
Net Sales
Aerospace & Defense	$	114,701		98,982		114,701		98,982
USG		87,309		79,161		87,309		79,161
Test		47,119		50,993		47,119		50,993
Totals	$	249,129		229,136		249,129		229,136
EBIT
Aerospace & Defense	$	23,377		18,795		23,640		19,595
USG		17,575		14,061		17,575		14,061
Test		5,542		7,226		5,745		7,226
Corporate		(14,047	)	(14,463	)	(13,262	)	(12,963	)
Consolidated EBIT		32,447		25,619		33,698		27,919
Less: Interest expense		(3,226	)	(2,269	)	(3,226	)	(2,269	)
Less: Income tax expense		(6,002	)	(5,472	)	(6,290	)	(6,001	)
Net earnings	$	23,219		17,878		24,182		19,649

Note 1: Adjusted net earnings of $24.2 million in Q2 2024 exclude $0.04 per share of after-tax charges consisting of: $0.02 of MPE acquisition backlog charges and $0.02 of restructuring charges (primarily severance) within the Test and A&D segments.

Note 2: Adjusted net earnings of $19.6 million in Q2 2023 exclude $0.07 per share of after-tax charges consisting of: $0.04 of executive management transition costs at Corporate, $0.02 of CMT acquisition inventory step-up charges and $0.01 of restructuring charges within the A&D segment.

EBITDA Reconciliation to Net earnings:							Q2 2024 -			Q2 2023 -
	Q2 2024			Q2 2023			As Adjusted			As Adjusted
Consolidated EBITDA	$	46,550			38,162			47,174			40,462
Less: Depr & Amort		(14,103	)		(12,543	)		(13,476	)		(12,543	)
Consolidated EBIT		32,447			25,619			33,698			27,919
Less: Interest expense		(3,226	)		(2,269	)		(3,226	)		(2,269	)
Less: Income tax expense		(6,002	)		(5,472	)		(6,290	)		(6,001	)
Net earnings	$	23,219			17,878			24,182			19,649

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Business Segment Information (Unaudited)

(Dollars in thousands)

	GAAP						As Adjusted
	YTD			YTD			YTD			YTD
	Q2 2024			Q2 2023			Q2 2024			Q2 2023
Net Sales
Aerospace & Defense	$	209,434			181,965			209,434			181,965
USG		170,293			150,206			170,293			150,206
Test		87,716			102,466			87,716			102,466
Totals	$	467,443			434,637			467,443			434,637
EBIT
Aerospace & Defense	$	40,040			31,331			40,303			32,330
USG		35,200			30,192			35,320			30,192
Test		7,321			12,637			7,797			12,637
Corporate		(27,993	)		(27,984	)		(26,557	)		(25,691	)
Consolidated EBIT		54,568			46,176			56,863			49,468
Less: Interest expense		(5,893	)		(3,927	)		(5,893	)		(3,927	)
Less: Income tax expense		(10,287	)		(9,644	)		(10,815	)		(10,401	)
Net earnings	$	38,388			32,605			40,155			35,140

Note 1: Adjusted net earnings of $40.2 million in YTD 2024 exclude $0.07 per share of after-tax charges consisting of: $0.05 of MPE acquisition backlog and inventory step-up charges and acquisition costs and $0.02 of restructuring costs (primarily severance) within the Test and A&D segments.

Note 2: Adjusted net earnings of $35.1 million in YTD 2023 exclude $0.10 per share of after-tax charges consisting of: $0.06 of executive management transition costs at Corporate, $0.02 of CMT acquisition inventory step-up charges and $0.02 of restructuring charges within the A&D segment.

EBITDA Reconciliation to Net earnings:							YTD			YTD
	YTD			YTD			Q2 2024 -			Q2 2023 -
	Q2 2024			Q2 2023			As Adj			As Adj
Consolidated EBITDA	$	82,123			71,086			83,582			74,378
Less: Depr & Amort		(27,555	)		(24,910	)		(26,719	)		(24,910	)
Consolidated EBIT		54,568			46,176			56,863			49,468
Less: Interest expense		(5,893	)		(3,927	)		(5,893	)		(3,927	)
Less: Income tax expense		(10,287	)		(9,644	)		(10,815	)		(10,401	)
Net earnings	$	38,388			32,605			40,155			35,140

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

	March 31,<br> 2024
Assets
Cash and cash equivalents	$	59,436	41,866
Accounts receivable, net		187,535	198,557
Contract assets		139,303	138,633
Inventories		211,338	184,067
Other current assets		24,310	17,972
Total current assets		621,922	581,095
Property, plant and equipment, net		161,811	155,484
Intangible assets, net		414,872	392,124
Goodwill		535,661	503,177
Operating lease assets		38,322	39,839
Other assets		11,603	11,495
	$	1,784,191	1,683,214
Liabilities and Shareholders' Equity
Current maturities of long-term debt	$	20,000	20,000
Accounts payable		81,961	86,973
Contract liabilities		107,357	112,277
Other current liabilities		79,612	95,401
Total current liabilities		288,930	314,651
Deferred tax liabilities		80,648	75,531
Non-current operating lease liabilities		35,444	36,554
Other liabilities		41,759	43,336
Long-term debt		171,000	82,000
Shareholders' equity		1,166,410	1,131,142
	$	1,784,191	1,683,214

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Six Months<br> Ended<br> March 31, 2024
Cash flows from operating activities:
Net earnings	$	38,388		32,605
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization		27,555		24,910
Stock compensation expense		4,144		5,309
Changes in assets and liabilities		(47,869	)	(67,140	)
Effect of deferred taxes		(2,981	)	(1,145	)
Net cash provided (used) by operating activities		19,237		(5,461	)
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(56,179	)	(17,901	)
Capital expenditures		(16,301	)	(10,305	)
Additions to capitalized software		(5,912	)	(5,918	)
Net cash used by investing activities		(78,392	)	(34,124	)
Cash flows from financing activities:
Proceeds from long-term debt		154,000		68,000
Principal payments on long-term debt and short-term borrowings		(65,000	)	(60,000	)
Dividends paid		(4,125	)	(4,128	)
Purchases of common stock into treasury		(7,189	)	(12,217	)
Other		(1,432	)	(2,374	)
Net cash provided (used) by financing activities		76,254		(10,719	)
Effect of exchange rate changes on cash and cash equivalents		471		801
Net increase (decrease) in cash and cash equivalents		17,570		(49,503	)
Cash and cash equivalents, beginning of period		41,866		97,724
Cash and cash equivalents, end of period	$	59,436		48,221

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Other Selected Financial Data (Unaudited)

(Dollars in thousands)

Backlog And Entered Orders - Q2 2024	A&D			USG			Test			Total
Beginning Backlog - 1/1/24	$	560,893			127,439			159,436			847,768
Entered Orders		116,110			79,025			43,937			239,072
Sales		(114,701	)		(87,309	)		(47,119	)		(249,129	)
Ending Backlog - 3/31/24	$	562,302			119,155			156,254			837,711
Backlog And Entered Orders - YTD Q2 2024	A&D			USG			Test			Total
---	---	---	---	---	---	---	---	---	---	---	---	---
Beginning Backlog - 10/1/23	$	484,069			133,459			154,834			772,362
Entered Orders		287,667			155,989			89,136			532,792
Sales		(209,434	)		(170,293	)		(87,716	)		(467,443	)
Ending Backlog - 3/31/24	$	562,302			119,155			156,254			837,711

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (Unaudited)

EPS – Adjusted Basis Reconciliation – Q2 2024
EPS – GAAP Basis – Q2 2024	0.90
Adjustments (defined below)	0.04
EPS – As Adjusted Basis – Q2 2024	0.94
Adjustments exclude 0.04 per share<br> consisting of: 0.02 of MPE acquisition backlog charges and 0.02 of restructuring charges (primarily severance) within the Test and A&D segments in the second quarter of 2024.
The 0.04 of EPS adjustments per share consists of 1,251K of pre-tax charges offset by 288K of tax benefit for net impact of 963K.
EPS – Adjusted Basis Reconciliation – Q2 2023
EPS – GAAP Basis – Q2 2023	0.69
Adjustments (defined below)	0.07
EPS – As Adjusted Basis – Q2 2023	0.76
Adjustments exclude 0.07 per share consisting of executive<br> management transition costs at Corporate, CMT acquisition inventory step-up charges and restructuring charges within the A&D segment in the second quarter of 2023.
The 0.07 of EPS adjustments per share consists of 2,300K of pre-tax charges offset by 529K of tax benefit for net impact of 1,771K.
EPS – Adjusted Basis Reconciliation – YTD Q2 2024
EPS – GAAP Basis – YTD Q2 2024	1.49
Adjustments (defined below)	0.07
EPS – As Adjusted Basis – YTD Q2 2024	1.56
Adjustments exclude 0.07 per share consisting of: 0.05 of<br> MPE acquisition backlog and inventory step-up charges and acquisition costs, and 0.02 of restructuring charges (primarily severance) within the Test and A&D segments in the first six months of 2024.
The 0.07 of EPS adjustments per share consists of 2,295K of pre-tax charges offset by 528K of tax benefit for net impact of 1,767K.
EPS – Adjusted Basis Reconciliation – YTD Q2 2023
EPS – GAAP Basis – YTD Q2 2023	1.26
Adjustments (defined below)	0.10
EPS – As Adjusted Basis – YTD Q2 2023	1.36
Adjustments exclude 0.10 per share consisting of executive<br> management transition costs at Corporate, CMT acquisition inventory step-up charges and restructuring charges within the A&D segment in the first six months of 2023.
The 0.10 of EPS adjustments per share consists of 3,292K of pre-tax charges offset by 757K of tax benefit for net impact of 2,535K.

All values are in US Dollars.