ESCO Technologies delivered a solid Q2 2025 performance underpinned by broad-based order activity and a substantial rear-view of the ESCO Maritime Solutions acquisition. The company announced a record backlog of $932 million as orders rose ~22% year over year across all segments, fueling revenue growth of 6.6% in the quarter to $265.5 million and generating adjusted EBIT margins of 18%. The disciplined pricing actions and favorable mix contributed to robust profitability, with adjusted EPS of $1.35, a 24% year-over-year increase. Management highlighted strong momentum across Aerospace & Defense (A&D), Utility Solutions (Doble and NRG), and Tests, while flagging tariff headwinds that are embedded in guidance.
The strategic acquisition of SM&P, rebranded as ESCO Maritime Solutions, closed on April 25, 2025 and is expected to contribute to the remainder of 2025 and to 2026 with a modest but meaningful EPS contribution (guidance includes $0.20–$0.30 of EPS from maritime). The firm also reaffirmed a 6–8% revenue growth trajectory pre-maritime, with five months of maritime sales anticipated at $90–$100 million. All-in adjusted EPS guidance was raised to $5.85–$6.15 for 2025, while tariff headwinds (~$2–$4 million) are reflected in the outlook. Net debt remained modest at approximately $66.6 million on a capital structure that supports continued deleveraging, with a debt/EBITDA ratio around 0.3x at the end of the period.
Investors should note the diversified earnings mix, tangible balance sheet strength, and improving cash generation, balanced against macro uncertainties, tariff exposure, and the integration risk associated with a multi-segment maritime acquisition. The company’s outlook hinges on continued Navy and commercial aerospace demand, resilience in the test and EMC-related segments, and execution on the new maritime platform.