On November 16, 2023, ESCO Technologies Inc (ESE, Financial) released its 8-K filing, announcing record results for the fourth quarter (Q4) and fiscal year (FY) 2023. The company reported an 11% increase in FY 2023 sales, reaching $956 million, and a significant growth in entered orders, which exceeded $1 billion for the first time. The Q4 GAAP EPS increased by 4% to $1.24 per share, while Adjusted EPS saw a 3% rise to $1.25 per share.
Financial Performance Highlights
ESCO Technologies Inc (ESE, Financial) experienced robust sales growth in FY 2023, with an 11% increase to $956 million. The company's organic sales grew by 10%, and the CMT acquisition contributed an additional 1% of revenue growth. The Q4 sales also saw a 6% increase to $273 million compared to the same period in the previous year. The company's year-end backlog reached a record $772 million, bolstered by a 39% increase in Q4 entered orders.
Despite higher working capital requirements and increased interest and tax payments, net cash provided by operating activities was $48 million in Q4 and $77 million for the full year. The company's EPS performance was strong, with Q4 GAAP EPS increasing to $1.24 and Adjusted EPS to $1.25. For the full year, GAAP EPS rose by 13% to $3.58, and Adjusted EPS by 15% to $3.70.
Segment Analysis
The Aerospace & Defense (A&D) segment reported a 3% increase in Q4 sales, while the Utility Solutions Group (USG) saw a significant 22% increase in the same period. The RF Test & Measurement (Test) segment, however, experienced an 8% decrease in Q4 sales. Adjusted EBIT for the A&D segment decreased in Q4, primarily due to margin erosion on space development contracts. Conversely, the USG segment's Adjusted EBIT increased, driven by higher volumes and price increases.
ESCO Technologies Inc (ESE, Financial) did not repurchase any shares in Q4 but bought back approximately 140,000 shares for $12 million during FY 2023. The company also announced a quarterly cash dividend of $0.08 per share, payable on January 19, 2024.
Future Outlook and Strategic Moves
ESCO Technologies Inc (ESE, Financial) has a positive outlook for FY 2024, expecting growth in sales, Adjusted EBIT, and Adjusted EBITDA across all business segments. The company projects net sales to grow by 7 to 9 percent, with Adjusted EPS anticipated to increase by 11 to 16 percent. The effective income tax rate for 2024 is expected to be between 22.5 to 23.5 percent.
The recent acquisition of MPE Limited is expected to be accretive to the sales growth and EBITDA margin profile of the Test segment, with annualized sales projected in the range of $12 to $14 million.
Management Commentary
“ESCO had a great year, as we delivered record sales, Adjusted EBIT, Adjusted EPS, entered orders, and year-end backlog. We are well positioned in a number of end-markets with excellent growth characteristics, and we continue to see orders and sales momentum across our portfolio," said Bryan Sayler, Chief Executive Officer and President of ESCO Technologies Inc (ESE, Financial).
For a detailed analysis of ESCO Technologies Inc (ESE)'s financials and further insights into the company's performance, readers are encouraged to visit the full 8-K filing.
Investors and stakeholders can look forward to the company's continued growth trajectory and strategic initiatives aimed at enhancing shareholder value. ESCO Technologies Inc (ESE, Financial) remains committed to leveraging its market position and diversified portfolio to navigate the dynamic business environment and deliver sustained financial performance.
Explore the complete 8-K earnings release (here) from ESCO Technologies Inc for further details.
