On this page of StockholderLetter.com we present the latest annual shareholder letter from ESCO TECHNOLOGIES INC — ticker symbol ESE. Reading current and past ESE letters to shareholders can bring important insights into the investment thesis.

 •  12/4/2024 Letter Continued (Full PDF)
 •  11/30/2023 ESE Stockholder Letter
 •  More "Industrial Machinery & Equipment" Category Stockholder Letters
 •  ESE Benford's Law Stock Score = 69

ESE Shareholder/Stockholder Letter Transcript:

2024
ANNUAL
REPORT
ESCO TECHNOLOGIES INC.

2021
2022
$1,027
2020
$956
$858
End Markets
IN MILLIONS
$715
HIGH-GROWTH,
HIGH-PROFIT
Net Sales
$730
A Focus on
2023
2024
$2.59
2020
2021
2022
2023
$4.18
$3.70
$3.21
$2.67
Earnings Per Share   
As Adjusted1
2024
ESCO is a well-established provider
solutions to industrial markets. In
Ending Backlog
IN MILLIONS
aerospace, navy, and utility end markets
$592
our product portfolio in the high-growth
$511
$772
towards simplifying and strengthening
$695
2024 we announced meaningful steps
$879
of highly-engineered products and
we serve.
2020
COVER PHOTO COURTESY NAVY.MIL
2021
2022
2023
2024

FINANCIAL HIGHLIGHTS FROM CONTINUING OPERATIONS 2
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
2020
2021
2022
2023
2024
$ 730
$ 715
$ 858
$ 956
$ 1,027
796
796
961
1,033
1,133
Earnings Per Share     GAAP
0.88
2.42
3.16
3.58
3.94
Earnings Per Share     As Adjusted1
2.67
2.59
3.21
3.70
4.18
Capital Performance
2020
2021
2022
2023
2024
$ 10
$ 98
$ 55
$ 60
$ 56
Leverage Ratio
0.47
1.03
0.78
0.54
0.45
Cash Flow from Operating Activities
109
123
135
77
128
Net Sales
Entered Orders
(AS OF SEPTEMBER 30)
Net Debt
ANNUAL REPORT
1 EPS     As adjusted excludes $0.24 per share of charges associated with debt financing and costs related to the pending SM&P acquisition,
restructuring (primarily severance), and MPE backlog and inventory step-up in 2024, $0.12 per share of charges associated with executive
management transition costs at Corporate, CMT acquisition inventory step-up, restructuring within A&D, and Corporate acquisition related costs
in 2023, $0.05 per share of charges associated with the Altanova and NEco acquisition inventory step-ups, severance at VACCO and NRG, and
Corporate acquisition and management transition costs in 2022, $0.17 per share mainly consisting of management transition and acquisition
costs at Corporate, restructuring costs primarily within the USG segment, and purchase accounting adjustments related to the Phenix and Altanova
acquisitions, partially offset by the final settlement from the sale of the Doble Watertown facility in 2021, and a $1.55 per share charge related to
the pension plan termination and $0.24 per share of charges primarily within the USG segment related to facility consolidation, asset impairment,
severance, and incremental costs associated with COVID-19 in 2020.
2 Financial Highlights exclude Discontinued Operations     Technical Packaging Segment sale was completed 12/31/19.
1

Letter to SHAREHOLDERS
2024 was another record year, highlighted by strong top and bottomline results. Over the past three years, our organic revenue growth has
averaged 10 percent, with acquisitions adding another 3 percent. This
robust growth is the result of both the strong end markets we serve and
great execution by our operating teams across the company.
ESCO TECHNOLOGIES INC.
Bryan Sayler
Chief Executive Officer & President
2
In utilities, both the increasing demand for electricity and the evolving
conversion to clean energy are driving growth. Regulated utilities need
to maintain and expand an aging grid. This is driving demand for our
diagnostic instruments, condition monitoring equipment, and services,
all of which are vital in maintaining both new and aging utility assets.
In renewables, we continued to see strong sales growth as the industry
continues to build out capacity and the role for renewables becomes
more clearly defined.
In A&D, our aerospace companies have proprietary content across major
commercial and defense platforms. While the aerospace OEM   s have
continued to face wide-ranging challenges, orders strength has remained
and our backlog is at a record level. Customer demand for planes is
strong and as OEM production rates increase, we expect it to continue to
drive long-term organic growth.
Geopolitical uncertainty is driving a sustained focus on naval defense
spending, where we are a crucial supplier of products that enhance the
stealth capabilities of U.S. submarines. We are well-positioned at a time
when the Navy is working to both increase build rates and secure the
supplier base through long-term procurement activity.
In July we announced the acquisition of Signature Management & Power
(SM&P), a well-established, long-standing provider of mission-critical
solutions for naval defense markets. SM&P will add significant scale to
our Navy business, providing increased sole source content on domestic
submarine and surface ship programs and expansion onto vital U.K. and
AUKUS platforms. We also announced a strategic review of alternatives
for the legacy space business at our VACCO subsidiary. Both moves
were made as a part of our ongoing strategic portfolio analysis aimed at
driving increased focus on our established high-growth, higher-margin
end markets.

2024 Sales
2024 EBITDA   As Adjusted1
DOLLARS IN MILLIONS
DOLLARS IN MILLIONS
$1,027m
$236m
Aerospace & Defense
Aerospace & Defense
$448.2
$99.6
Utility Solutions Group
36%
44%
$369.1
RF Test & Measurement
$209.5
20%
Utility Solutions Group
43%
42%
$101.7
RF Test & Measurement
$34.5
15%
1 Excludes $31.1 million of Corporate costs and $4.1 million of charges related to the pending SM&P acquisition, restructuring (primarily severance),
and MPE backlog and inventory step-up.
ANNUAL REPORT
FINANCIALS RESULTS
2024 entered orders increased by 10 percent to $1.1 billion. Orders
strength was highlighted by A&D which grew by $96 million (21 percent)
over the prior year, driven by strong submarine and aerospace demand.
With a book-to-bill of 1.10, we ended the year with record backlog of
$879 million, an increase of 14 percent over the prior year.
Sales increased 7 percent and surpassed $1 billion for the first time,
driven by 6 percent organic growth and 1 percent related to the MPE
acquisition early in the year. A&D delivered double digit revenue growth
for the third consecutive year. Commercial and defense aerospace
revenue grew by 17 percent, despite industry disruptions related to
Boeing quality and production issues and Navy revenue increased 22
percent, driven by Block V deliveries and increased shipset content on
the VA Class submarine program. USG revenue increased 8 percent, on
double digit growth in condition monitoring, services, and renewables.
Adjusted EPS increased 13 percent to $4.18 per share and Adjusted
EBITDA increased 12 percent to $205 million, resulting in an Adjusted
EBITDA margin of 20 percent.
COURTESY NAVY.MIL
3



 12/4/2024 Letter Continued (Full PDF)