ESCO TECHNOLOGIES INC._DECEMBER 31, 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-10596

ESCO TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

MISSOURI	43-1554045
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

645 MARYVILLE CENTRE DRIVE, SUITE 300
ST. LOUIS, MISSOURI	63141-5855
(Address of principal executive offices)	(Zip Code)

(314) 213-7200

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ESE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Shares outstanding at January 31, 2026
Common stock, $.01 par value per share		25,895,762

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended
	December 31,
	2025		2024
Net sales	$	289,659	214,593
Costs and expenses:
Cost of sales		169,740	124,214
Selling, general and administrative expenses		61,207	54,969
Amortization of intangible assets		20,324	7,993
Interest expense, net		2,880	2,257
Other expenses (income), net		30	(637)
Total costs and expenses		254,181	188,796

Earnings before income taxes		35,478	25,797
Income tax expense		6,787	5,490
Net earnings from continuing operations	$	28,691	20,307
Earnings from discontinued operations, net of tax expense of $978		—	3,166
Net earnings		28,691	23,473

Earnings per share:
Basic – Continuing operations		1.11	0.79
– Discontinued operations		—	0.12
– Net earnings	$	1.11	0.91

Diluted – Continuing operations		1.11	0.79
– Discontinued operations		—	0.12
– Net earnings	$	1.11	0.91

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)


	Three Months Ended
	December 31,
	2025		2024
Net earnings	$	28,691	23,473
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		639	(18,028)
Total other comprehensive income (loss), net of tax		639	(18,028)
Comprehensive income	$	29,330	5,445

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


		December 31,			September 30,
		2025			2025
ASSETS
Current assets:
Cash and cash equivalents		$	103,824			101,350
Accounts receivable, net of allowance for credit losses of $3,514 and $3,205, respectively			245,328			253,554
Contract assets, net			88,662			90,730
Inventories			227,153			217,807
Other current assets			24,686			25,065
Total current assets			689,653			688,506
Property, plant and equipment, net of accumulated depreciation of $192,611 and $186,796, respectively			171,810			172,493
Intangible assets, net of accumulated amortization of $307,289 and $286,965 respectively			706,383			723,973
Goodwill			767,375			761,931
Operating lease assets			46,592			47,707
Other assets			17,186			15,778
Total assets		$	2,398,999			2,410,388

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings		$	20,511			20,000
Accounts payable			92,291			96,534
Contract liabilities, net			252,360			216,590
Accrued salaries			31,929			53,301
Income tax payable – current			60,478			62,007
Accrued other expenses			60,824			59,716
Total current liabilities			518,393			508,148
Deferred tax liabilities			115,776			112,390
Non-current operating lease liabilities			43,466			44,403
Other liabilities			35,500			38,576
Long-term debt			125,000			166,000
Total liabilities			838,135			869,517
Shareholders’ equity:
Preferred stock, par value $.01 per share, authorized 10,000,000 shares			—			—
Common stock, par value $.01 per share, authorized 50,000,000 shares, issued 30,952,504 and 30,886,024 shares, respectively			309			309
Additional paid-in capital			308,929			316,194
Retained earnings			1,400,530			1,373,911
Accumulated other comprehensive loss, net of tax			(1,829)			(2,468)
			1,707,939			1,687,946
Less treasury stock, at cost: 5,056,771 and 5,056,771 common shares, respectively			(147,075)			(147,075)
Total shareholders’ equity			1,560,864			1,540,871
Total liabilities and shareholders’ equity		$	2,398,999			2,410,388

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Three Months Ended
	December 31,
	2025		2024
Cash flows from operating activities:
Net earnings	$	28,691	23,473
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net earnings from discontinued operations, net of tax		—	(3,166)
Depreciation and amortization		26,493	12,971
Stock compensation expense		3,233	2,524
Changes in assets and liabilities		7,056	(8,171)
Effect of deferred taxes		3,388	1,521
Net cash provided by operating activities – continuing operations		68,861	29,152
Net cash provided by operating activities – discontinued operations		—	5,022
Net cash provided by operating activities		68,861	34,174
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(5,134)	—
Additions to capitalized software		(2,196)	(2,587)
Capital expenditures		(5,902)	(5,124)
Net cash used by investing activities – continuing operations		(13,232)	(7,711)
Net cash used by investing activities – discontinued operations		—	(84)
Net cash used by investing activities		(13,232)	(7,795)
Cash flows from financing activities:
Proceeds from long-term debt and short-term borrowings		52,511	42,000
Principal payments on long-term debt and short-term borrowings		(93,000)	(52,000)
Dividends paid		(2,072)	(2,064)
Other		(10,609)	(6,031)
Net cash used by financing activities		(53,170)	(18,095)
Effect of exchange rate changes on cash and cash equivalents		15	(2,963)
Net increase in cash and cash equivalents		2,474	5,321
Cash and cash equivalents, beginning of period		101,350	65,963
Cash and cash equivalents, end of period	$	103,824	71,284

Supplemental cash flow information:
Interest paid	$	2,689	2,567
Income taxes paid		127	222

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements, in the opinion of management, include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim periods presented. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all the disclosures required for annual financial statements by accounting principles generally accepted in the United States of America (GAAP). For further information refer to the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

The Company’s results for the three-month period ended December 31, 2025 are not necessarily indicative of the results for the entire 2026 fiscal year. References to the first quarters of 2026 and 2025 represent the fiscal quarters ended December 31, 2025 and 2024, respectively. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

2. EARNINGS PER SHARE (EPS)

Basic EPS is calculated using the weighted average number of common shares outstanding during the period. Diluted EPS is calculated using the weighted average number of common shares outstanding during the period plus shares issuable upon the assumed dilutive vesting of unvested performance-based share awards and time-vested restricted shares by using the treasury stock method. The number of shares used in the calculation of earnings per share for each period presented is as follows (in thousands):


	Three Months
	Ended December 31,
	2025	2024
Weighted Average Shares Outstanding — Basic	25,855	25,781
Dilutive Shares	27	53
Adjusted Shares — Diluted	25,882	25,834

3. SHARE-BASED COMPENSATION

The Company provides compensation benefits to certain key employees under several share-based plans providing for a combination of performance-based share unit (PSU) awards and time-vested restricted share unit (RSU) awards, and to non-employee directors under a separate compensation plan.

PSU and RSU Awards

Compensation expense related to these awards was $2.9 million and $2.2 million for the three-month periods ended December 31, 2025 and 2024, respectively. There were 173,478 non-vested shares outstanding as of December 31, 2025.

Non-Employee Directors Plan

Compensation expense related to the non-employee director grants was $0.3 million and $0.3 million for the three-month periods ended December 31, 2025 and 2024, respectively.

The total share-based compensation cost that has been recognized in the results of operations and included within selling, general and administrative expenses (SG&A) was $3.2 million and $2.5 million for the three-month periods ended December 31, 2025 and 2024, respectively. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $0.7 million and $0.8 million for the three-month periods ended December 31, 2025 and 2024, respectively. As of December 31, 2025 there was approximately $22 million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is expected to be recognized over a remaining weighted-average period of 2.0 years.

4. INVENTORIES

Inventories consist of the following:


	December 31,		September 30,
(In thousands)	2025		2025
Finished goods	$	51,803	52,644
Work in process		55,085	46,825
Raw materials		120,265	118,338
Total inventories	$	227,153	217,807

5.	GOODWILL AND OTHER INTANGIBLE ASSETS

Included on the Company’s Consolidated Balance Sheets at December 31, 2025 and September 30, 2025 are the following intangible assets gross carrying amounts and accumulated amortization from continuing operations:


		December 31,			September 30,
(Dollars in thousands)		2025			2025
Goodwill		$	767,375		761,931

Intangible assets with determinable lives:
Patents
Gross carrying amount		$	7,611		7,607
Less: accumulated amortization			1,902		1,775
Net		$	5,709		5,832

Capitalized software
Gross carrying amount		$	140,746		138,144
Less: accumulated amortization			103,462		100,818

SEC Form 10-Q filed by ESCO Technologies Inc.