ESCO Technologies (ESE) Q4 2024 earnings summary

Executive summary

• Achieved record Q4 and full-year sales, both surpassing $1 billion for the first time, with strong momentum and margin expansion across all business segments.

• Q4 sales rose 9.5% year-over-year to $299M, with organic growth of 8.5% and MPE acquisition contributing 1%.

• Adjusted EPS grew 16.8% to $1.46 in Q4 and 13% to $4.18 for FY 2024, at the high end of guidance.

• Ended FY 2024 with a record backlog of $879M, up 14% year-over-year, and a book-to-bill ratio of 1.10.

• Management remains optimistic about future growth, supported by robust market demand and ongoing investments.

Financial highlights

• Q4 Adjusted EBIT margin rose 130 bps to 17.4%; Adjusted EBITDA margin up 1.2 pts to 22.1%.

• Full-year orders up 10%, sales up 7.4%, Adjusted EBIT up 14%, and Adjusted EPS up 13% year-over-year.

• Operating cash flow for FY 2024 was $128M, a substantial increase from the prior year; capital expenditures were $36.2M.

• Q4 entered orders were $289M, down 14.9% from a record Q4'23, but backlog increased by $107M.

• FY 2024 Adjusted EBIT: $150.1M; Adjusted EBITDA: $204.7M.

Outlook and guidance

• FY 2025 net sales expected to grow 6–8% to $1.09–$1.11B; Adjusted EPS projected to increase 12–17% to $4.70–$4.90.

• Adjusted EBIT for FY 2025 expected to rise 12–15% with margins of 15.3–15.7%.

• By segment, A&D and Utility/USG sales growth forecast at 7–9%, Test segment at 3–5%.

• Q1 2025 Adjusted EPS expected in the range of $0.68–$0.75.

• Guidance excludes impact from the pending SM&P acquisition and the strategic review of the VACCO space business.