ESCO Technologies (ESE) Q3 2026 earnings summary

Executive summary

• Q3 2026 sales grew 14% year-over-year to $339 million, with organic sales up 8% and strong momentum across aerospace, Navy, test, and utility markets; Maritime contributed $23 million in growth.

• Adjusted EBIT rose 19% and Adjusted EPS increased 38% to $2.20, with GAAP EPS from continuing operations up 31% to $1.26.

• Record backlog reached $1.54 billion, up 36% from September 2025, with consolidated book-to-bill ratio of 1.21 and all segments above 1.0.

• Implementation of the ESCO Operating System is driving execution consistency and sustainable value creation.

Financial highlights

• Q3 2026 net sales were $339 million, up $43 million (14%) year-over-year; organic sales up 8%.

• Adjusted EBIT margin improved by 90 bps to 22%; Adjusted EBITDA margin increased to 24.7%.

• Q3 2026 Adjusted EPS was $2.20, up 38% year-over-year; YTD Adjusted EPS up 55%.

• Operating cash flow for the first nine months was $193.4 million, up $105.1 million year-over-year, driven by advanced Navy contract payments.

• Capital expenditures for the first nine months were $24.6 million.

Outlook and guidance

• FY 2026 sales guidance raised to $1.30–$1.33 billion (19–21% growth); Adjusted EPS guidance raised to $8.30–$8.40 (38–39% growth).

• Q4 2026 Adjusted EPS expected at $2.55–$2.65 (10–14% growth vs. Q4 FY25).

• Guidance excludes the Megger acquisition, expected to close in Q1 FY 2027, funded by $0.9B in cash and $1.4B in equity.

• Segment revenue guidance: A&D (excluding Maritime) 8–10%, Test 10–12%, Utility 4–6%, with Doble expected to maintain low double-digit growth.

• NRG expected to return to growth in FY 2027 after another YoY decline in Q4.