ESCO Technologies (ESE) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered strong results with net sales up 35% to $289.7 million, driven by robust performance in all segments and significant contributions from the Maritime acquisition.

• Orders surged 143% year-over-year to $557.2 million, with record backlog reaching $1.4 billion and a book-to-bill ratio of 1.92.

• Adjusted EPS rose 73% to $1.64, while GAAP EPS from continuing operations increased 41% to $1.11.

• Backlog increased 24% from September 2025, with 58% expected to convert to revenue within twelve months.

• Strong cash flow and liquidity position support ongoing operations and capital needs.

Financial highlights

• Net sales: $289.7 million, up 35% year-over-year; organic sales up 11%.

• Orders: $557.2 million, up 143% year-over-year; organic orders up 39%.

• Adjusted EBIT margin expanded by 380 basis points to 19.4%; Adjusted EBITDA margin up 320 bps to 22.5%.

• Adjusted EPS: $1.64, up 73%; GAAP EPS: $1.11, up 41%.

• Operating cash flow: $68.9 million, more than doubled year-over-year.

Outlook and guidance

• FY 2026 sales guidance raised to $1.29–$1.33 billion (18–21% growth), mainly due to Test business outperformance.

• Adjusted EPS guidance increased to $7.90–$8.15, representing 31–35% growth; Q2 2026 Adjusted EPS expected at $1.75–$1.85.

• Aerospace & Defense revenue growth forecast raised to 34–39%, including 7–9% organic growth; Test segment guidance raised to 9–11% growth.

• Full-year tax rate guidance lowered to 23–23.5%.

• 58% of backlog expected to convert to revenue within twelve months.