0000866706--09-302026Q2falseMOMOhttp://fasb.org/us-gaap/2025#OtherAccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2025#OtherAccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2025#PropertyPlantAndEquipmentNet0000866706us-gaap:TreasuryStockCommonMember2026-03-310000866706us-gaap:RetainedEarningsMember2026-03-310000866706us-gaap:CommonStockMember2026-03-310000866706us-gaap:AdditionalPaidInCapitalMember2026-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2026-03-310000866706us-gaap:TreasuryStockCommonMember2025-12-310000866706us-gaap:RetainedEarningsMember2025-12-310000866706us-gaap:CommonStockMember2025-12-310000866706us-gaap:AdditionalPaidInCapitalMember2025-12-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-12-310000866706us-gaap:TreasuryStockCommonMember2025-09-300000866706us-gaap:RetainedEarningsMember2025-09-300000866706us-gaap:CommonStockMember2025-09-300000866706us-gaap:AdditionalPaidInCapitalMember2025-09-300000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-09-300000866706us-gaap:TreasuryStockCommonMember2025-03-310000866706us-gaap:RetainedEarningsMember2025-03-310000866706us-gaap:CommonStockMember2025-03-310000866706us-gaap:AdditionalPaidInCapitalMember2025-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-03-310000866706us-gaap:TreasuryStockCommonMember2024-12-310000866706us-gaap:RetainedEarningsMember2024-12-310000866706us-gaap:CommonStockMember2024-12-310000866706us-gaap:AdditionalPaidInCapitalMember2024-12-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-12-310000866706us-gaap:TreasuryStockCommonMember2024-09-300000866706us-gaap:RetainedEarningsMember2024-09-300000866706us-gaap:CommonStockMember2024-09-300000866706us-gaap:AdditionalPaidInCapitalMember2024-09-300000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300000866706us-gaap:CommonStockMember2026-01-012026-03-310000866706us-gaap:AdditionalPaidInCapitalMember2026-01-012026-03-310000866706us-gaap:CommonStockMember2025-10-012026-03-310000866706us-gaap:AdditionalPaidInCapitalMember2025-10-012026-03-310000866706us-gaap:AdditionalPaidInCapitalMember2025-01-012025-03-310000866706us-gaap:CommonStockMember2024-10-012025-03-310000866706us-gaap:AdditionalPaidInCapitalMember2024-10-012025-03-310000866706ese:PerformanceShareUnitAndTimeVestedRestrictedStockUnitMember2026-03-3100008667062026-04-012026-03-310000866706us-gaap:NonUsMemberese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706us-gaap:NonUsMemberese:RFShieldingAndTestMember2026-01-012026-03-310000866706us-gaap:NonUsMemberese:AerospaceAndDefenseMember2026-01-012026-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredOverTimeMember2026-01-012026-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredAtPointInTimeMember2026-01-012026-03-310000866706ese:USGovernmentMemberese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706ese:USGovernmentMemberese:RFShieldingAndTestMember2026-01-012026-03-310000866706ese:USGovernmentMemberese:AerospaceAndDefenseMember2026-01-012026-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredOverTimeMember2026-01-012026-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredAtPointInTimeMember2026-01-012026-03-310000866706ese:CommercialMemberese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706ese:CommercialMemberese:RFShieldingAndTestMember2026-01-012026-03-310000866706ese:CommercialMemberese:AerospaceAndDefenseMember2026-01-012026-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredOverTimeMember2026-01-012026-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredAtPointInTimeMember2026-01-012026-03-310000866706country:USese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706country:USese:RFShieldingAndTestMember2026-01-012026-03-310000866706country:USese:AerospaceAndDefenseMember2026-01-012026-03-310000866706us-gaap:TransferredOverTimeMember2026-01-012026-03-310000866706us-gaap:TransferredAtPointInTimeMember2026-01-012026-03-310000866706us-gaap:NonUsMember2026-01-012026-03-310000866706ese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706ese:USGovernmentMember2026-01-012026-03-310000866706ese:RFShieldingAndTestMember2026-01-012026-03-310000866706ese:CommercialMember2026-01-012026-03-310000866706ese:AerospaceAndDefenseMember2026-01-012026-03-310000866706country:US2026-01-012026-03-310000866706us-gaap:NonUsMemberese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706us-gaap:NonUsMemberese:RFShieldingAndTestMember2025-10-012026-03-310000866706us-gaap:NonUsMemberese:AerospaceAndDefenseMember2025-10-012026-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredOverTimeMember2025-10-012026-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredAtPointInTimeMember2025-10-012026-03-310000866706ese:USGovernmentMemberese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706ese:USGovernmentMemberese:RFShieldingAndTestMember2025-10-012026-03-310000866706ese:USGovernmentMemberese:AerospaceAndDefenseMember2025-10-012026-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredOverTimeMember2025-10-012026-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredAtPointInTimeMember2025-10-012026-03-310000866706ese:CommercialMemberese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706ese:CommercialMemberese:RFShieldingAndTestMember2025-10-012026-03-310000866706ese:CommercialMemberese:AerospaceAndDefenseMember2025-10-012026-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredOverTimeMember2025-10-012026-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredAtPointInTimeMember2025-10-012026-03-310000866706country:USese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706country:USese:RFShieldingAndTestMember2025-10-012026-03-310000866706country:USese:AerospaceAndDefenseMember2025-10-012026-03-310000866706us-gaap:TransferredOverTimeMember2025-10-012026-03-310000866706us-gaap:TransferredAtPointInTimeMember2025-10-012026-03-310000866706us-gaap:NonUsMember2025-10-012026-03-310000866706ese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706ese:USGovernmentMember2025-10-012026-03-310000866706ese:CommercialMember2025-10-012026-03-310000866706ese:AerospaceAndDefenseMember2025-10-012026-03-310000866706country:US2025-10-012026-03-310000866706us-gaap:NonUsMemberese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706us-gaap:NonUsMemberese:RFShieldingAndTestMember2025-01-012025-03-310000866706us-gaap:NonUsMemberese:AerospaceAndDefenseMember2025-01-012025-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredOverTimeMember2025-01-012025-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredAtPointInTimeMember2025-01-012025-03-310000866706ese:USGovernmentMemberese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706ese:USGovernmentMemberese:RFShieldingAndTestMember2025-01-012025-03-310000866706ese:USGovernmentMemberese:AerospaceAndDefenseMember2025-01-012025-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredOverTimeMember2025-01-012025-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredAtPointInTimeMember2025-01-012025-03-310000866706ese:CommercialMemberese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706ese:CommercialMemberese:RFShieldingAndTestMember2025-01-012025-03-310000866706ese:CommercialMemberese:AerospaceAndDefenseMember2025-01-012025-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredOverTimeMember2025-01-012025-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredAtPointInTimeMember2025-01-012025-03-310000866706country:USese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706country:USese:RFShieldingAndTestMember2025-01-012025-03-310000866706country:USese:AerospaceAndDefenseMember2025-01-012025-03-310000866706us-gaap:TransferredOverTimeMember2025-01-012025-03-310000866706us-gaap:TransferredAtPointInTimeMember2025-01-012025-03-310000866706us-gaap:NonUsMember2025-01-012025-03-310000866706ese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706ese:USGovernmentMember2025-01-012025-03-310000866706ese:RFShieldingAndTestMember2025-01-012025-03-310000866706ese:CommercialMember2025-01-012025-03-310000866706ese:AerospaceAndDefenseMember2025-01-012025-03-310000866706country:US2025-01-012025-03-310000866706us-gaap:NonUsMemberese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706us-gaap:NonUsMemberese:RFShieldingAndTestMember2024-10-012025-03-310000866706us-gaap:NonUsMemberese:AerospaceAndDefenseMember2024-10-012025-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredOverTimeMember2024-10-012025-03-310000866706ese:UtilitySolutionsGroupMemberus-gaap:TransferredAtPointInTimeMember2024-10-012025-03-310000866706ese:USGovernmentMemberese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706ese:USGovernmentMemberese:RFShieldingAndTestMember2024-10-012025-03-310000866706ese:USGovernmentMemberese:AerospaceAndDefenseMember2024-10-012025-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredOverTimeMember2024-10-012025-03-310000866706ese:RFShieldingAndTestMemberus-gaap:TransferredAtPointInTimeMember2024-10-012025-03-310000866706ese:CommercialMemberese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706ese:CommercialMemberese:RFShieldingAndTestMember2024-10-012025-03-310000866706ese:CommercialMemberese:AerospaceAndDefenseMember2024-10-012025-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredOverTimeMember2024-10-012025-03-310000866706ese:AerospaceAndDefenseMemberus-gaap:TransferredAtPointInTimeMember2024-10-012025-03-310000866706country:USese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706country:USese:RFShieldingAndTestMember2024-10-012025-03-310000866706country:USese:AerospaceAndDefenseMember2024-10-012025-03-310000866706us-gaap:TransferredOverTimeMember2024-10-012025-03-310000866706us-gaap:TransferredAtPointInTimeMember2024-10-012025-03-310000866706us-gaap:NonUsMember2024-10-012025-03-310000866706ese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706ese:USGovernmentMember2024-10-012025-03-310000866706ese:RFShieldingAndTestMember2024-10-012025-03-310000866706ese:CommercialMember2024-10-012025-03-310000866706ese:AerospaceAndDefenseMember2024-10-012025-03-310000866706country:US2024-10-012025-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2026-01-012026-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-10-012026-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-01-012025-03-310000866706us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-10-012025-03-310000866706ese:SeniorIncrementalDelayedDrawTermLoanFacilityMember2026-03-310000866706us-gaap:RevolvingCreditFacilityMember2025-09-300000866706ese:SeniorIncrementalDelayedDrawTermLoanFacilityMember2025-09-300000866706srt:MaximumMember2026-03-310000866706us-gaap:TrademarksAndTradeNamesMember2026-03-310000866706us-gaap:TrademarksAndTradeNamesMember2025-09-300000866706ese:RFShieldingAndTestMember2025-10-012026-03-310000866706us-gaap:CorporateNonSegmentMember2026-03-310000866706ese:RFShieldingAndTestMember2026-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2025-09-300000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2025-09-300000866706us-gaap:OperatingSegmentsMember2025-09-300000866706ese:RFShieldingAndTestMember2025-09-300000866706us-gaap:PatentsMember2026-03-310000866706us-gaap:OtherIntangibleAssetsMember2026-03-310000866706us-gaap:CustomerRelationshipsMember2026-03-310000866706ese:CapitalizedSoftwareMember2026-03-310000866706us-gaap:PatentsMember2025-09-300000866706us-gaap:OtherIntangibleAssetsMember2025-09-300000866706us-gaap:CustomerRelationshipsMember2025-09-300000866706ese:CapitalizedSoftwareMember2025-09-300000866706ese:NonEmployeeDirectorsPlanMember2026-03-310000866706us-gaap:RetainedEarningsMember2026-01-012026-03-310000866706us-gaap:RetainedEarningsMember2025-10-012026-03-310000866706us-gaap:RetainedEarningsMember2025-01-012025-03-310000866706us-gaap:RetainedEarningsMember2024-10-012025-03-310000866706us-gaap:OperatingSegmentsMember2026-01-012026-03-310000866706us-gaap:OperatingSegmentsMember2025-10-012026-03-310000866706us-gaap:OperatingSegmentsMember2025-01-012025-03-310000866706us-gaap:OperatingSegmentsMember2024-10-012025-03-310000866706srt:MaximumMemberus-gaap:LoansPayableMember2024-08-0500008667062024-09-300000866706ese:MeggerGroupLimitedMemberus-gaap:SubsequentEventMember2026-08-152026-08-150000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2026-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2026-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2026-03-310000866706us-gaap:OperatingSegmentsMember2026-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2025-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2025-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2025-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2026-01-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2026-01-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2026-01-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2025-10-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2025-10-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2025-10-012026-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2025-01-012025-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2025-01-012025-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2025-01-012025-03-3100008667062025-01-012025-03-310000866706us-gaap:OperatingSegmentsMemberese:UtilitySolutionsGroupMember2024-10-012025-03-310000866706us-gaap:OperatingSegmentsMemberese:RFShieldingAndTestMember2024-10-012025-03-310000866706us-gaap:OperatingSegmentsMemberese:AerospaceAndDefenseMember2024-10-012025-03-310000866706ese:PerformanceShareUnitAndTimeVestedRestrictedStockUnitMember2026-01-012026-03-310000866706ese:PerformanceShareUnitAndTimeVestedRestrictedStockUnitMember2025-10-012026-03-310000866706ese:PerformanceShareUnitAndTimeVestedRestrictedStockUnitMember2025-01-012025-03-310000866706ese:PerformanceShareUnitAndTimeVestedRestrictedStockUnitMember2024-10-012025-03-310000866706us-gaap:OperatingSegmentsMember2025-03-310000866706us-gaap:CorporateNonSegmentMember2025-03-3100008667062025-03-3100008667062025-09-300000866706ese:NonEmployeeDirectorsPlanMember2026-01-012026-03-310000866706ese:NonEmployeeDirectorsPlanMember2025-10-012026-03-310000866706ese:NonEmployeeDirectorsPlanMember2025-01-012025-03-310000866706ese:NonEmployeeDirectorsPlanMember2024-10-012025-03-310000866706us-gaap:CorporateNonSegmentMember2026-01-012026-03-310000866706us-gaap:CorporateNonSegmentMember2025-10-012026-03-310000866706us-gaap:CorporateNonSegmentMember2025-01-012025-03-310000866706us-gaap:CorporateNonSegmentMember2024-10-012025-03-3100008667062024-10-012025-03-310000866706srt:SubsidiariesMemberus-gaap:RelatedPartyMember2026-01-012026-03-310000866706srt:SubsidiariesMemberus-gaap:RelatedPartyMember2025-10-012026-03-310000866706us-gaap:RevolvingCreditFacilityMember2026-03-3100008667062026-03-310000866706srt:MinimumMember2025-10-012026-03-310000866706srt:MaximumMember2025-10-012026-03-3100008667062026-01-012026-03-3100008667062026-04-3000008667062025-10-012026-03-31xbrli:sharesxbrli:pureiso4217:USDese:itemese:customeriso4217:USDxbrli:sharesese:segment

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 MARCH 31, 2026


☐	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 DR., 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 April 30, 2026
Common stock, $.01 par value per share		25,907,172

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
	March,
	2026		2025
Net sales	$	309,341	231,777
Costs and expenses:
Cost of sales		178,026	132,504
Selling, general and administrative expenses		62,830	54,294
Amortization of intangible assets		20,420	7,989
Interest expense, net		2,399	2,195
Other expenses (income), net		1,802	375
Total costs and expenses		265,477	197,357

Earnings before income taxes		43,864	34,420
Income tax expense		10,308	8,037
Earnings from continuing operations		33,556	26,383
Earnings from discontinued operations, net of tax expense of $363 and $1,429		1,177	4,650

Net earnings	$	34,733	31,033

Earnings per share:
Basic – Continuing operations	$	1.29	1.02
– Discontinued operations		0.05	0.18
– Net earnings	$	1.34	1.20

Diluted – Continuing operations	$	1.29	1.02
– Discontinued operations		0.05	0.18
– Net earnings	$	1.34	1.20

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)


		Six Months Ended
		March 31,
		2026			2025

Net sales		$	599,000		446,370
Costs and expenses:
Cost of sales			347,766		256,718
Selling, general and administrative expenses			124,037		109,263
Amortization of intangible assets			40,744		15,982
Interest expense, net			5,279		4,452
Other expenses (income), net			1,832		(262)
Total costs and expenses			519,658		386,153

Earnings before income taxes			79,342		60,217
Income tax expense			17,095		13,527
Earnings from continuing operations			62,247		46,690
Earnings from discontinued operations, net of tax expense of $363 and $2,407			1,177		7,816

Net earnings		$	63,424		54,506

Earnings per share:

Basic – Continuing operations		$	2.40		1.81
– Discontinued operations			0.05		0.30
– Net earnings		$	2.45		2.11

Diluted – Continuing operations		$	2.40		1.81
– Discontinued operations			0.05		0.30
– Net earnings		$	2.45		2.11

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				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
Net earnings	$	34,733	31,033		63,424		54,506
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(11,482)	8,133		(10,843)		(9,895)
Total other comprehensive income (loss), net of tax		(11,482)	8,133		(10,843)		(9,895)
Comprehensive income	$	23,251	39,166		52,581		44,611

See accompanying notes to condensed consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)


		March 31,			September 30,
		2026			2025
ASSETS
Current assets:
Cash and cash equivalents		$	92,252			101,350
Accounts receivable, net of allowance for credit losses of $3,644 and $3,205, respectively			256,835			253,554
Contract assets			103,532			90,730
Inventories			237,090			217,807
Other current assets			37,084			25,065
Total current assets			726,793			688,506
Property, plant and equipment, net of accumulated depreciation of $197,427 and $186,796, respectively			170,860			172,493
Intangible assets, net of accumulated amortization of $327,709 and $286,965, respectively			682,372			723,973
Goodwill			761,181			761,931
Operating lease assets			48,977			47,707
Other assets			15,622			15,778
Total assets		$	2,405,805			2,410,388

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt		$	20,000			20,000
Accounts payable			106,677			96,534
Contract liabilities			269,402			216,590
Accrued salaries			38,936			53,301
Income tax payable - current			5,619			62,007
Accrued other expenses			59,731			59,716
Total current liabilities			500,365			508,148
Deferred tax liabilities			115,140			112,390
Non-current operating lease liabilities			45,707			44,403
Other liabilities			34,173			38,576
Long-term debt			125,000			166,000
Total liabilities			820,385			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 30,963,943 and 30,886,024 shares, respectively			310			309
Additional paid-in capital			312,304			316,194
Retained earnings			1,433,192			1,373,911
Accumulated other comprehensive income (loss), net of tax			(13,311)			(2,468)
			1,732,495			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			1,585,420			1,540,871
Total liabilities and shareholders’ equity		$	2,405,805			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)


	Six Months Ended
	March 31,
	2026		2025
Cash flows from operating activities:
Net earnings	$	63,424	54,506
Adjustments to reconcile net earnings to net cash provided by operating activities:
(Earnings) loss from discontinued operations, net of tax		(1,177)	(7,816)
Depreciation and amortization		53,330	26,041
Stock compensation expense		6,565	5,323
Changes in assets and liabilities		7,304	(30,033)
Effect of deferred taxes		5,176	(1,714)
Net cash provided by operating activities – continuing operations		134,622	46,307
Net cash (used) provided by operating activities – discontinued operations		(59,340)	11,968
Net cash provided by operating activities		75,282	58,275
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(10,232)	—
Capital expenditures		(13,134)	(14,864)
Additions to capitalized software and other		(4,801)	(5,465)
Net cash used by investing activities – continuing operations		(28,167)	(20,329)
Net cash provided (used) by investing activities – discontinued operations		1,540	(486)
Net cash used by investing activities		(26,627)	(20,815)
Cash flows from financing activities:
Proceeds from long-term debt		110,000	66,000
Principal payments on long-term debt		(151,000)	(100,000)
Dividends paid		(4,144)	(4,130)
Other		(10,644)	(6,146)
Net cash used by financing activities – continuing operations		(55,788)	(44,276)
Net cash used by financing activities – discontinued operations		—	—
Net cash used by financing activities		(55,788)	(44,276)
Effect of exchange rate changes on cash and cash equivalents		(1,965)	(1,750)
Net decrease in cash and cash equivalents		(9,098)	(8,566)
Cash and cash equivalents, beginning of period		101,350	65,963
Cash and cash equivalents, end of period	$	92,252	57,397

Supplemental cash flow information:
Interest paid	$	4,958	8,821
Income taxes paid (including state and foreign)	$	67,862	20,232

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 condensed 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 and six-month periods ended March 31, 2026 are not necessarily indicative of the results for the entire 2026 fiscal year. References to the second quarters of 2026 and 2025 represent the fiscal quarters ended March 31, 2026 and 2025, 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 exercise 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			Six Months
	Ended March 31,			Ended March 31,
	2026	2025		2026		2025
Weighted Average Shares Outstanding — Basic	25,902	25,816		25,877		25,798
Dilutive Shares	36	61		32		57
Adjusted Shares — Diluted	25,938	25,877		25,909		25,855

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.

Performance Share Unit (PSU) Awards and Time-Vested Restricted Stock Unit (RSU) Awards

Compensation expense related to these awards was $3.0 million and $5.9 million for the three and six-month periods ended March 31, 2026, respectively, and $2.4 million and $4.6 million for the corresponding periods in 2025. As of March 31, 2026, there were 169,191 unvested stock units outstanding.

Non-Employee Directors Plan

Compensation expense related to the non-employee director grants was $0.3 million and $0.6 million for the three and six-month periods ended March 31, 2026, respectively, and $0.4 million and $0.7 million for the corresponding periods in 2025.

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 $3.3 million and $6.6 million for the three and six-month periods ended March 31, 2026, respectively, and $2.8 million and $5.3 million for the corresponding periods in 2025. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $0.7 million and $1.4 million for the three- and six-month periods ended March 31, 2026, respectively, and $0.6 million and $1.1 million for the corresponding periods in 2025. As of March 31, 2026, there was $18.8 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 1.8 years.

4. INVENTORIES

Inventories from continuing operations consist of the following:


	March 31,		September 30,
(In thousands)	2026		2025
Finished goods	$	50,740	52,644
Work in process		63,243	46,825
Raw materials		123,107	118,338
Total inventories	$	237,090	217,807

5.	GOODWILL AND OTHER INTANGIBLE ASSETS

Included on the Company’s condensed Consolidated Balance Sheets at March 31, 2026 and September 30, 2025 are the following intangible assets gross carrying amounts and accumulated amortization from continuing operations:


		March 31,			September 30,
(Dollars in thousands)		2026			2025
Goodwill		$	761,181		761,931

Intangible assets with determinable lives:
Patents
Gross carrying amount		$	7,618		7,607
Less: accumulated amortization			2,030		1,775
Net		$	5,588		5,832

Capitalized software
Gross carrying amount		$	143,307		138,144
Less: accumulated amortization			106,097		100,818
Net		$	37,210		37,326

Customer relationships
Gross carrying amount		$	620,238		625,535
Less: accumulated amortization			178,987		159,543
Net		$	441,251		465,992

Other
Gross carrying amount		$	76,331		76,991
Less: accumulated amortization			40,595		24,829
Net		$	35,736		52,162
Intangible assets with indefinite lives:
Trade names		$	162,587		162,661

The changes in the carrying amount of goodwill attributable to each business segment from continuing operations for the six months ended March 31, 2026 is as follows:


(Dollars in millions)	A&D		Test	USG		Total
Balance as of September 30, 2025	$	334.0	67.8	360.1		761.9
Acquisition activity and other		5.1	—	—		5.1
Foreign currency translation		(3.3)	(0.9)	(1.6)		(5.8)
Balance as of March 31, 2026	$	335.8	66.9	358.5		761.2

6. BUSINESS SEGMENT INFORMATION

We adopted the provisions of ASU 2023-07 Segment Reporting for the year ended September 30, 2025. We are organized based on the products and services we offer, and we classify our business operations in three reportable segments for financial reporting purposes: Aerospace & Defense (A&D), Utility Solutions Group (USG) and RF Test & Measurement (Test). Corporate is not a reportable segment, but it is included for reconciliation purposes.

The A&D segment’s operations consist of PTI, Crissair, Globe, Mayday, and Maritime. Previously, A&D also included VACCO Industries which was sold in July 2025 and is reported in discontinued operations. The companies within this segment primarily design and manufacture specialty filtration, fluid control and naval products, including hydraulic filter elements and fluid control devices used in aerospace and defense applications; custom designed filters for manned aircraft and submarines; products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, power management and control equipment; sealing, surface control and hydrodynamic related applications to enhance U.S. and UK Navy maritime survivability; precision-tolerance machined components for the aerospace and defense industry; metal processing services; and miniature electro-explosive devices utilized in mission-critical defense and aerospace applications.

The USG segment’s operations consist of Doble Engineering Company and related subsidiaries including Morgan Schaffer and Altanova/ISA (collectively, Doble), and NRG. Doble is an industry leader in the development, manufacture and delivery of diagnostic testing and data management solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment, and Altanova/ISA’s strong market presence in Europe and Asia provides Doble with a significant international platform. Doble combines three core elements for customers – diagnostic test and condition monitoring instruments, expert consulting, and testing services – and provides access to its large reserve of related empirical knowledge. NRG is a global market leader in the design and manufacture of decision support tools for the renewable energy industry, primarily wind and solar.

The Test segment’s operations consist of ETS-Lindgren Inc., including its related subsidiaries, and MPE Limited (collectively, ETS-Lindgren). ETS-Lindgren is an industry leader in designing and manufacturing products and systems to measure and control RF energy. It serves the medical, health and safety, electronics, wireless communications, automotive and defense markets, supplying a broad range of turnkey systems, including RF test facilities and measurement systems, RF and magnetically shielded rooms and secure communication facilities, and providing the design, program management, installation and integration services required to successfully complete these types of facilities. It also supplies a broad range of components including RF absorptive materials, filters, antennas, field probes, test cells, proprietary measurement software and other test accessories required to perform a variety of tests and measurements, and offers a variety of services including calibration and product tests.

Accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements in the Company’s Form 10-K for the year ended September 30, 2025. The operating units within each reporting segment have been aggregated because of similar economic characteristics and meet the other aggregation criteria of FASB ASC 280, Segment Reporting.

Measurement of Segment Results

Our CODM, who is our Chief Executive Officer, evaluates each segment’s performance and allocates resources based on segment EBIT, which is defined as earnings before interest and taxes. EBIT on a consolidated basis is a non-GAAP financial measure and is reconciled to consolidated earnings before income taxes below for continuing operations. Intersegment sales and transfers are not significant. Segment assets consist primarily of customer receivables, inventories, capitalized software and fixed assets directly associated with the production processes of the segment. Segment depreciation and amortization is based upon the direct assets listed above. Corporate assets consist primarily of acquired intangible assets including goodwill, deferred taxes and cash balances. The tables below are presented on the basis of continuing operations and exclude discontinued operations.


Three Months Ended March 31, 2026									Segment
(In thousands)		A&D			USG		Test		Total
Net Sales		$	150,310		93,529		65,502			309,341

Cost of sales			90,200		43,343		44,482
SG&A expense			16,976		24,871		10,235
Amortization of intangible assets			161		2,035		508
Other expenses (income), net			6		794		1,504
Segment profit (loss)		$	42,967		22,486		8,773			74,226

Depreciation and Amortization		$	3,465		4,126		1,465			9,056
Segment Assets		$	402,119		280,735		196,281			879,135
Capital Expenditures		$	5,542		1,062		618			7,222

Reconciliation of segment profit to Earnings before Income Taxes

Segment profit total from above									$	74,226
Less:
Unallocated Corporate SG&A and Other expense (income), net										(10,247)
Unallocated amortization of intangible assets										(17,716)
Interest expense, net										(2,399)
Earnings before Income Taxes									$	43,864

Reconciliation of segment depreciation and amortization to consolidated totals

Segment Depreciation and Amortization									$	9,056
Add: Corporate Depreciation and Amortization										17,781
Consolidated totals									$	26,837

Reconciliation of segment assets to consolidated totals

Segment Assets total									$	879,135
Add:
Goodwill not allocated to segments										761,181
Acquired intangible assets not allocated to segments										639,574	(1)
Other unallocated amounts										125,915
Consolidated totals									$	2,405,805

(1)	Consists of customer relationships, trade names and other intangible assets. See Note 5 for details.


Reconciliation of segment capital expenditures to consolidated totals

Segment Capital Expenditures	$	7,222
Add: Corporate Capital Expenditures		10
Consolidated totals	$	7,232


Six Months Ended March 31, 2026									Segment
(In thousands)		A&D			USG		Test		Total
Net Sales		$	294,139		181,013		123,848			599,000
Cost of sales			180,271		83,273		84,221
SG&A expense			32,509		50,914		19,887
Amortization of intangible assets			316		4,078		1,022
Other expenses (income), net			89		733		1,903
Segment profit (loss)		$	80,954		42,015		16,815			139,784

Depreciation and Amortization		$	6,747		8,206		2,921			17,874
Segment Assets		$	402,119		280,735		196,281			879,135
Capital Expenditures		$	9,454		2,632		991			13,077

Reconciliation of segment profit to Earnings before Income Taxes

Segment profit total from above									$	139,784
Less:
Unallocated Corporate SG&A and Other expense (income), net										(19,836)
Unallocated amortization of intangible assets										(35,327)
Interest expense, net										(5,279)
Earnings before Income Taxes									$	79,342

Reconciliation of segment depreciation and amortization to consolidated totals

Segment Depreciation and Amortization									$	17,874
Add: Corporate Depreciation and Amortization										35,456
Consolidated totals									$	53,330

Reconciliation of segment assets to consolidated totals

Segment Assets total									$	879,135
Add:
Goodwill not allocated to segments										761,181
Acquired intangible assets not allocated to segments										639,574	(1)
Other unallocated amounts										125,915
Consolidated totals									$	2,405,805

(1)	Consists of customer relationships, trade names and other intangible assets. See Note 5 for details.


Reconciliation of segment capital expenditures to consolidated totals

Segment Capital Expenditures	$	13,077
Add: Corporate Capital Expenditures		57
Consolidated totals	$	13,134


Three Months Ended March 31, 2025					Segment
(In thousands)	A&D		USG	Test	Total
Net Sales	$	89,627	90,767	51,383		231,777

Cost of sales		54,603	43,422	34,609
SG&A expense		10,594	24,343	9,699
Amortization of intangible assets		328	2,018	454
Other expenses (income), net		(115)	205	252
Segment profit (loss)	$	24,217	20,779	6,369		51,365

Depreciation and Amortization	$	2,836	3,864	1,354		8,054
Segment Assets	$	283,061	280,884	173,481		737,426
Capital Expenditures	$	3,489	3,596	1,635		8,720

Reconciliation of segment profit to Earnings before Income Taxes

Segment profit total from above					$	51,365
Less:
Unallocated Corporate SG&A and Other expense (income), net						(9,561)
Unallocated amortization of intangible assets						(5,189)
Interest expense, net						(2,195)
Earnings before Income Taxes					$	34,420

Reconciliation of segment depreciation and amortization to consolidated totals

Segment Depreciation and Amortization					$	8,054
Add: Corporate Depreciation and Amortization						5,016
Consolidated totals					$	13,070

Reconciliation of segment assets to consolidated totals

Segment Assets total					$	737,426
Add:
Goodwill not allocated to segments						526,258
Acquired intangible assets not allocated to segments						348,607
Other unallocated amounts						83,871
Consolidated totals					$	1,696,162

(1)	Consists of customer relationships, trade names and other intangible assets. See Note 5 for details.


Reconciliation of segment capital expenditures to consolidated totals

Segment Capital Expenditures	$	8,720
Add: Corporate Capital Expenditures		852
Consolidated totals	$	9,572


Six Months Ended March 31, 2025					Segment
(In thousands)	A&D		USG	Test	Total
Net Sales	$	171,495	177,427	97,448		446,370

Cost of sales		108,116	82,760	65,972
SG&A expense		21,462	50,259	18,749
Amortization of intangible assets		541	4,090	1,076
Other expenses (income), net		(293)	(950)	860
Segment profit (loss)	$	41,669	41,268	10,791		93,728

Depreciation and Amortization	$	5,486	7,752	2,729		15,967
Segment Assets	$	283,061	280,884	173,481		737,426
Capital Expenditures	$	5,922	5,585	2,505		14,012

Reconciliation of segment profit to Earnings before Income Taxes

Segment profit total from above					$	93,728
Less:
Unallocated Corporate SG&A and Other expense (income), net						(18,784)
Unallocated amortization of intangible assets						(10,275)
Interest expense, net						(4,452)
Earnings before Income Taxes					$	60,217

Reconciliation of segment depreciation and amortization to consolidated totals

Segment Depreciation and Amortization					$	15,967
Add: Corporate Depreciation and Amortization						10,074
Consolidated totals					$	26,041

Reconciliation of segment assets to consolidated totals

Segment Assets total					$	737,426
Add:
Goodwill not allocated to segments						526,258
Acquired intangible assets not allocated to segments						348,607
Other unallocated amounts						83,871
Consolidated totals					$	1,696,162

(1)	Consists of customer relationships, trade names and other intangible assets. See Note 5 for details.


Reconciliation of segment capital expenditures to consolidated totals

Segment Capital Expenditures	$	14,012
Add: Corporate Capital Expenditures		852
Consolidated totals	$	14,864

Non-GAAP Financial Measures

The financial measure “EBIT” is presented in the above tables and elsewhere in this Report. EBIT on a consolidated basis is a non-GAAP financial measure. Management believes that EBIT is useful in assessing the operational profitability of the Company’s business segments because it excludes interest and taxes, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by management in determining resource allocations within the Company as well as incentive compensation. A reconciliation of EBIT to net earnings is set forth in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – EBIT.

The Company believes that the presentation of EBIT provides important supplemental information to investors to facilitate comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. However, the Company’s non-GAAP financial measures may not be comparable to other companies’ non-GAAP financial performance measures. Furthermore, the use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

7. DEBT

The Company’s debt is summarized as follows:


	March 31,		September 30,
(In thousands)	2026		2025
Revolving credit facility	$	45,000	25,000
Incremental facility (Term loan A)		100,000	161,000
Total borrowings	$	145,000	186,000
Current portion of long-term debt		(20,000)	(20,000)
Total long-term debt, less current portion	$	125,000	166,000

The Credit Facility includes a $500 million revolving line of credit as well as provisions allowing for the increase of the credit facility commitment amount by an additional $250 million, if necessary, with the consent of the lenders. The bank syndication supporting the facility is comprised of a diverse group of seven banks led by JP Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and Commerce Bank and TD Bank, N.A. as co-documentation agents. The Credit Facility matures August 30, 2028, with balance due by this date.

On August 5, 2024, the Company and certain of its subsidiaries entered into Amendment No. 1 to the Credit Facility which, among other things, (i) implements a senior incremental delayed draw term loan credit facility in an aggregate principal amount of up to $375 million (the “Incremental Facility”), and (ii) permits the direct or indirect acquisition by the Registrant or certain of its subsidiaries of all the issued and outstanding shares of PMES I Limited, Measurement Systems, Inc., EMS Development Corporation, and DNE Technologies, Inc. (the “Maritime Acquisition”), pursuant to and in accordance with the terms and conditions of that certain Sale and Purchase Agreement, dated July 8, 2024. During the third quarter of 2025, the proceeds of the loans drawn under the Incremental Facility were applied to pay a portion of the cash consideration for the Maritime Acquisition and other customary fees, premiums, expenses and costs incurred in connection with the acquisition. The Incremental Facility matures August 30, 2028, with balance due by this date.

At March 31, 2026, the Company had approximately $440 million available to borrow under the Credit Facility, plus the $250 million increase option subject to the lenders’ consent, in addition to $92.3 million cash on hand. The Company classified $20 million as the current portion of long-term debt as of March 31, 2026, as the Company intends to repay this amount as obligated by the repayment terms of the Incremental Facility within the next twelve months. The letters of credit issued and outstanding under the Credit Facility totaled $14.5 million at March 31, 2026.

Interest on borrowings under the Credit Facility and the Incremental Facility is calculated at a spread ranging from 0.25% to 2.25% over either an Adjusted Term SOFR Rate, Adjusted EURIBOR Rate, Adjusted CDOR Rate, Alternate Base Rate or Daily Simple RFR, at the Company’s election. The Credit Facility also requires a facility fee ranging from 12.5 to 25 basis points per annum. The interest rate spreads and the facility fee are subject to increase or decrease depending on the Company’s leverage ratio. The weighted average interest rates under the Credit Facility were 5.06% and 5.28% for the three and six-month periods ending March 31, 2026, respectively, and 5.77% and 5.95% for the three- and six-month periods ending March 31, 2025. The weighted average interest rate under the Incremental Facility was 5.27% and 5.44% for the three and six-month periods ending March 31, 2026. As of March 31, 2026, the Company was in compliance with all covenants.

8. INCOME TAX EXPENSE

The second quarter 2026 effective income tax rate from continuing operations was 23.5% compared to 23.3% in the second quarter of 2025. The effective income tax rate from continuing operations in the first six months of 2026 was 21.5% compared to 22.5% for the first six months of 2025. Income tax expense in the first six months of 2026 was favorably impacted by additional tax benefits related to the vesting of share-based compensation awards.

9. SHAREHOLDERS’ EQUITY

The change in shareholders’ equity for the first three and six months of 2026 and 2025 is shown below (in thousands):


	Three Months Ended March 31,			Six Months Ended March 31,
	2026		2025	2026	2025
Common stock
Beginning balance	$	309	309	309	308
Stock plans		1	—	1	1
Ending balance	$	310	309	310	309

Additional paid-in-capital
Beginning balance	$	308,929	308,143	316,194	311,942
Stock plans		3,375	3,295	(3,890)	(504)
Ending balance	$	312,304	311,438	312,304	311,438

Retained earnings
Beginning balance	$	1,400,530	1,104,359	1,373,911	1,082,950
Net earnings common stockholders		34,733	31,033	63,424	54,506
Dividends paid		(2,071)	(2,066)	(4,143)	(4,130)
Ending balance	$	1,433,192	1,133,326	1,433,192	1,133,326

Accumulated other comprehensive income (loss)
Beginning balance	$	(1,829)	(28,803)	(2,468)	(10,775)
Foreign currency translation		(11,482)	8,133	(10,843)	(9,895)
Ending balance	$	(13,311)	(20,670)	(13,311)	(20,670)

Treasury stock
Beginning balance	$	(147,075)	(147,075)	(147,075)	(147,075)
Share repurchases		—	—	—	—
Ending balance	$	(147,075)	(147,075)	(147,075)	(147,075)

Total equity	$	1,585,420	1,277,328	1,585,420	1,277,328

10. FAIR VALUE MEASUREMENTS

The accounting guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows:

●

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

●

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial Assets and Liabilities

The Company has estimated the fair value of its financial instruments as of March 31, 2026 and September 30, 2025 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables, and other current assets and liabilities approximate fair value because of the short maturity of those instruments.

Fair Value of Financial Instruments

The Company’s forward contracts and interest rate swaps are classified within Level 2 of the valuation hierarchy in accordance with FASB Accounting Standards Codification (ASC) 825 and are immaterial.

Nonfinancial Assets and Liabilities

The Company’s nonfinancial assets such as property, plant and equipment, and other intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. No impairments were recorded during the three and six-month periods ended March 31, 2026.

11. REVENUES

Disaggregation of Revenues

The tables below present our revenues from continuing operations by customer type, geographic location, and revenue recognition method for the three and six-month periods ending March 31, 2026, as we believe this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors.


Three months ended March 31, 2026
(In thousands)	A&D		USG		Test		Total
Customer type:
Commercial	$	55,937		89,982		55,229		201,148
Government		94,373		3,547		10,273		108,193
Total revenues	$	150,310		93,529		65,502		309,341

Geographic location:
United States	$	99,609		58,873		40,584		199,066
International		50,701		34,656		24,918		110,275
Total revenues	$	150,310		93,529		65,502		309,341

Revenue recognition method:
Point in time	$	69,877		75,227		15,188		160,292
Over time		80,433		18,302		50,314		149,049
Total revenues	$	150,310		93,529		65,502		309,341


Six months ended March 31, 2026
(In thousands)		A&D			USG		Test		Total
Customer type:
Commercial		$	101,733			175,721		101,546		379,000
Government			192,406			5,292		22,302		220,000
Total revenues		$	294,139			181,013		123,848		599,000

Geographic location:
United States		$	192,396			119,597		77,066		389,059
International			101,743			61,416		46,782		209,941
Total revenues		$	294,139			181,013		123,848		599,000

Revenue recognition method:
Point in time		$	136,412			143,515		27,304		307,231
Over time			157,727			37,498		96,544		291,769
Total revenues		$	294,139			181,013		123,848		599,000

Revenues by customer type, geographic location, and revenue recognition method for the three and six-month periods ended March 31, 2025 are presented in the tables below from continuing operations.


Three months ended March 31, 2025
(In thousands)	A&D		USG		Test		Total
Customer type:
Commercial	$	48,702		89,649		37,891		176,242
Government		40,925		1,118		13,492		55,535
Total revenues	$	89,627		90,767		51,383		231,777

Geographic location:
United States	$	66,612		54,944		32,267		153,823
International		23,015		35,823		19,116		77,954
Total revenues	$	89,627		90,767		51,383		231,777

Revenue recognition method:
Point in time	$	52,364		73,002		11,607		136,973
Over time		37,263		17,765		39,776		94,804
Total revenues	$	89,627		90,767		51,383		231,777


Six months ended March 31, 2025
(In thousands)	A&D		USG		Test		Total
Customer type:
Commercial	$	94,458		173,928		74,240		342,626
Government		77,037		3,499		23,208		103,744
Total revenues	$	171,495		177,427		97,448		446,370

Geographic location:
United States	$	131,926		114,860		60,897		307,683
International		39,569		62,567		36,551		138,687
Total revenues	$	171,495		177,427		97,448		446,370

Revenue recognition method:
Point in time	$	99,359		142,280		21,398		263,037
Over time		72,136		35,147		76,050		183,333
Total revenues	$	171,495		177,427		97,448		446,370

Revenue Recognition

Payment terms with our customers vary by the type and location of the customer and the products or services offered. Arrangements with customers that include payment terms extending beyond one year are not significant. The transaction price for these contracts reflects our estimate of returns and discounts, which are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Under the typical payment terms of our long term fixed price contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of costs incurred as the work progresses.

For our overtime revenue recognized using the output method of costs incurred, contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to one or more years, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change. In addition, in the USG segment, we recognize revenue as a series of distinct services based on each day of providing services (straight-line over the contract term) for certain of our USG segment contracts. Under the typical payment terms of our service contracts, the customer pays us in advance of when services are performed. In addition, in the Test segment, we use milestones to measure progress for our Test segment contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.

Remaining Unsatisfied Performance Obligations

Remaining unsatisfied performance obligations, as defined by ASC 606 and align with our backlog, represent the expected transaction price allocated to contracts that the Company expects to recognize as revenue in future periods when the Company performs under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At March 31, 2026, the Company had $1,470.0 million in remaining performance obligations of which the Company expects to recognize revenues of approximately 55% in the next twelve months.

Contract assets, contract liabilities and accounts receivable

Assets and liabilities related to contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At March 31, 2026, contract assets, contract liabilities and accounts receivable totaled $103.5 million, $275.6 million and $256.8 million, respectively. During the first six months of 2026, the Company recognized approximately $56 million in revenues that were included in the contract liabilities balance at September 30, 2025. At September 30, 2025, contract assets, contract liabilities and accounts receivable from continuing operations totaled $90.7 million, $224.7 million and $253.6 million, respectively.

12. LEASES

The Company determines at lease inception whether an arrangement that provides control over the use of an asset is a lease. The Company recognizes at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Certain of the Company’s leases include options to extend the term of the lease for up to 20 years. When it is reasonably certain that the Company will exercise the option, Management includes the impact of the option in the lease term for purposes of determining total future lease payments. As most of the Company’s lease agreements do not explicitly state the discount rate implicit in the lease, Management uses the Company’s incremental borrowing rate on the commencement date to calculate the present value of future payments based on the tenor of each arrangement.

The Company’s leases for real estate commonly include escalating payments. These variable lease payments are included in the calculation of the ROU asset and lease liability. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease.

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. Non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.

The Company’s leases are for office space, manufacturing facilities, and machinery and equipment.

The components of lease costs are shown below:


		Three Months Ended			Three Months Ended
		March 31,			March 31,
(Dollars in thousands)		2026			2025
Finance lease cost
Amortization of right-of-use assets		$	372			372
Interest on lease liabilities			188			202
Operating lease cost			2,204			1,731
Total lease costs		$	2,764			2,305


		Six Months Ended			Six Months Ended
		March 31,			March 31,
(Dollars in thousands)		2026			2025
Finance lease cost
Amortization of right-of-use assets		$	744			744
Interest on lease liabilities			379			408
Operating lease cost			4,432			3,461
Total lease costs		$	5,555			4,613

Additional information related to leases are shown below:


		Three Months Ended			Three Months Ended
		March 31,			March 31,
(Dollars in thousands)		2026			2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	2,121			1,668
Operating cash flows from finance leases		$	188			202
Financing cash flows from finance leases		$	386			355
Right-of-use assets obtained in exchange for operating lease liabilities		$	4,144			1,040


		Six Months Ended			Six Months Ended
		March 31,			March 31,
(Dollars in thousands)		2026			2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	4,117			3,313
Operating cash flows from finance leases		$	379			408
Financing cash flows from finance leases		$	767			706
Right-of-use assets obtained in exchange for operating lease liabilities		$	4,609			3,972


		March 31,		March 31,
		2026		2025
Weighted-average remaining lease term
Operating leases		9.1	years	10.2	years
Finance leases		9.3	years	10.0	years
Weighted-average discount rate
Operating leases		4.85	%	4.68	%
Finance leases		4.77	%	4.72	%

The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on our condensed Consolidated Balance Sheet on March 31, 2026:


(Dollars in thousands)	Operating		Finance
Years Ending September 30:	Leases		Leases
2026 (excluding the six months ended March 31, 2026)	$	4,240	1,150
2027		8,306	2,357
2028		8,132	2,417
2029		6,647	2,478
2030 and thereafter		37,651	11,575
Total minimum lease payments		64,976	19,977
Less: amounts representing interest		13,092	4,191
Present value of net minimum lease payments	$	51,884	15,786
Less: current portion of lease obligations		6,177	1,616
Non-current portion of lease obligations		45,707	14,170

ROU assets	$	48,977	11,450

Operating lease liabilities are included in the condensed Consolidated Balance Sheet in accrued other expenses (current portion) and as a caption on the Consolidated Balance Sheet (long-term portion). Finance lease liabilities are included on the Consolidated Balance Sheet in accrued other expenses (current portion) and other liabilities (long-term portion). Operating lease ROU assets are included as a caption on the Consolidated Balance Sheet and finance lease ROU assets are included in property, plant and equipment on the Consolidated Balance sheet.

13. NEW ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses,” which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement, rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU will be effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Other than additional disclosure, we do not expect a change to our consolidated statements of operations, financial position, or cash flows.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures. This ASU will be effective for fiscal years beginning after December 15, 2024. Other than additional disclosure, we do not expect a change to our consolidated statements of operations, financial position, or cash flows.

14. RELATED PARTIES

Two of the Company’s directors are officers at two customers of the Company’s Doble subsidiary. Doble sells products, leases equipment and provides testing services in the ordinary course of Doble’s business. The total amount of these sales to these two customers was approximately $1.0 million and $2.3 million for the three- and six-month periods ending March 31, 2026. All transactions between Doble and the two customers are intended to be and have been consistent with Doble’s normal commercial terms offered to its customers, and the Company’s Board of Directors has determined that the relationships between the Company and the customers are not material and did not impair the Company’s or the directors’ independence.

15. SUBSEQUENT EVENT

On April 15, 2026, the Company signed a definitive agreement to acquire the Megger Group Limited (Megger) business of TBG AG. Megger is a global provider of testing, monitoring, and data-driven solutions for utilities and critical electric infrastructure, including industrial, transportation, data center and renewable end markets. Under the terms of the agreement, ESCO will acquire Megger for total consideration of approximately $2.35 billion, consisting of $0.9 billion in cash and ESCO equity valued at approximately $1.4 billion. The cash portion will be funded through existing cash on hand and incremental debt, with committed financing in place. The Company expects to complete the acquisition in the first quarter of fiscal 2027. Megger will become part of the Company’s Utility Solution Group (USG) segment. See further discussion of the transaction and financing arrangements in the Company’s Form 8-K’s filed April 15, 2026 and April 16, 2026.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following discussion refers to the Company’s results from continuing operations, except where noted. References to the second quarters of 2026 and 2025 represent the three-month periods ended March 31, 2026 and 2025, respectively.

OVERVIEW

In the second quarter of 2026, sales, net earnings and diluted earnings per share were $309.3 million, $33.6 million and $1.29 per share, respectively, compared to $231.8 million, $26.4 million and $1.02 per share, respectively, in the second quarter of 2025. In the first six months of 2026, sales, net earnings and diluted earnings per share were $599.0 million, $62.2 million and $2.40 per share, respectively, compared to $446.4 million, $46.7 million and $1.81 per share, respectively, in the first six months of 2025.

NET SALES

In the second quarter of 2026, net sales of $309.3 million were $77.5 million, or 33.4%, higher than the $231.8 million in the second quarter of 2025. In the first six months of 2026, net sales of $599.0 million were $152.6 million, or 34.2%, higher than the $446.4 million in the first six months of 2025. The increase in net sales in the second quarter of 2026 as compared to the second quarter of 2025 was due to a $60.7 million increase in the A&D segment, a $14.1 million increase in the Test segment and a $2.7 million increase in the USG segment. The increase in net sales in the first six months of 2026 as compared to the first six months of 2025 was due to a $122.6 million increase in the A&D segment, a $26.4 million increase in the Test segment and a $3.6 million increase in the USG segment.

-A&D

In the second quarter of 2026, net sales of $150.3 million were $60.7 million, or 67.7%, higher than the $89.6 million in the second quarter of 2025. In the first six months of 2026, net sales of $294.1 million were $122.6 million, or 71.5%, higher than the $171.5 million in the first six months of 2025. The sales increase in the second quarter of 2026 compared to the second quarter of 2025 was mainly due to a $44.3 million increase in navy revenues and a $14.0 million increase in aerospace revenues (defense and commercial). Maritime contributed $47.8 million of revenue growth in the second quarter of 2026. The sales increase in the first six months of 2026 compared to the first six months of 2025 was mainly due to a $88.5 million increase in navy revenues, a $29.8 million increase in aerospace revenues (defense and commercial) and a $3.3 million increase in industrial shipments. Maritime contributed $98.4 million of revenue growth in the first six months of 2026.

-USG

In the second quarter of 2026, net sales of $93.5 million were $2.7 million, or 3.0%, higher than the $90.8 million in the second quarter of 2025. In the first six months of 2026, net sales of $181.0 million were $3.6 million, or 2.0%, higher than the $177.4 million in the first six months of 2025. The increase in the second quarter of 2026 compared to the second quarter of 2025 was due to an $8.4 million increase in net sales at Doble driven by higher sales of protection testing, offline products and services, partially offset by a $5.7 million decrease in net sales at NRG driven by lower shipments of solar and wind products due to weakness in the renewables market. The increase in the first six months of 2026 compared to the corresponding period of 2025 was due to a $12.5 million increase in net sales at Doble driven by higher sales of condition monitoring and offline products, partially offset by an $8.9 million decrease in net sales at NRG for the reasons mentioned above.

-Test

In the second quarter of 2026, net sales of $65.5 million were $14.1 million, or 27.4%, higher than the $51.4 million in the second quarter of 2025. In the first six months of 2026, net sales of $123.8 million were $26.4 million, or 27.1%, higher than the $97.4 million in the first six months of 2025. The increase in the second quarter of 2026 as compared to the second quarter of 2025 was due to a $10.1 million increase in sales from the segment’s U.S. operations, a $2.8 million increase in sales from the segment’s Asian operations, and a $1.2 million increase from the segment’s European operations; due to higher Test and Measurement and filters volumes. The increase in the first six months of 2026 compared to the first six months of 2025 was due to a $20.2 million increase in sales from the segment’s U.S. operations, a $4.2 million increase from the segment’s European operations and a $2.0 million increase in sales from the segment’s Asian operations for the reasons mentioned above.

ORDERS AND BACKLOG

Backlog was $1,470.0 million at March 31, 2026 compared with $1,133.6 million at September 30, 2025. The Company received new orders totaling $378.2 million in the second quarter of 2026 compared to $265.7 million in the second quarter of 2025. Of the new orders received in the second quarter of 2026, $183.8 million related to A&D products, $101.3 million related to USG products, and $93.1 million related to Test products. Of the new orders received in the second quarter of 2025, $96.5 million related to A&D products, $92.2 million related to USG products, and $77.0 million related to Test products.

The Company received new orders totaling $935.4 million in the first six months of 2026 compared to $494.9 million in the first six months of 2025. Of the new orders received in the first six months of 2026, $566.1 million related to A&D products, $200.1 million related to USG products, and $169.2 million related to Test products. Of the new orders received in the first six months of 2025, $171.3 million related to A&D products, $181.8 million related to USG products, and $141.8 million related to Test products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative (SG&A) expenses for the second quarter of 2026 were $62.8 million (20.3% of net sales), compared with $54.3 million (23.4% of net sales) for the second quarter of 2025. For the first six months of 2026, SG&A expenses were $124.0 million (20.7% of net sales) compared to $109.3 million (24.5% of net sales) for the first six months of 2025. The increase in SG&A in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly due to an increase within the A&D segment due to the Maritime acquisition; increased expenses at all three business segments primarily related to higher sales and inflationary impacts and an increase at Corporate mainly due to acquisition costs. SG&A as a percentage of net sales decreased in the second quarter and first six months of 2026 within all three business segments.

AMORTIZATION OF INTANGIBLE ASSETS

Amortization of intangible assets was $20.4 million and $40.7 million for the second quarter and first six months of 2026, respectively, compared to $8.0 million and $16.0 million for the corresponding periods of 2025. Amortization expenses consist of amortization of acquired intangible assets from acquisitions and other identifiable intangible assets (primarily software). The increase in amortization expense in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly due to an increase in amortization of intangible assets related to the Maritime acquisition.

OTHER EXPENSES (INCOME), NET

Other expenses, net, was $1.8 million in the second quarter of 2026 compared with $0.4 million in the second quarter of 2025. Other expenses, net, was $1.8 million in the first six months of 2026 compared to other (income) of ($0.3) million in the first six months of 2025. The principal components of other expenses, net, in the second quarter and first six months of 2026 included $1.3 million of restructuring charges within the Test segment due to the exit of the acoustics product line (primarily asset write-offs, contract termination charges and severance), and $0.6 million of restructuring charges (primarily severance) within the USG segment. There were no individually significant items in other expenses (income), net, in the second quarter of 2025. The principal component of other expenses, net, in the first six months of 2025 was approximately $0.5 million of restructuring charges (primarily severance) within the Test and USG segments.

EBIT

The Company evaluates the performance of its operating segments based on EBIT, and provides EBIT on a consolidated basis. EBIT is a non-GAAP financial measure. Please refer to the discussion of non-GAAP financial measures in Note 6 to the condensed Consolidated Financial Statements, above. EBIT was $46.3 million (15.0% of net sales) for the second quarter of 2026 compared to $36.6 million (15.8% of net sales) for the second quarter of 2025. For the first six months of 2026, EBIT was $84.6 million (14.1% of net sales) compared to $64.7 million (14.5% of net sales) for the first six months of 2025.

The following table presents a reconciliation of EBIT from continuing operations to net earnings.


	Three Months Ended						Six Months Ended
	March 31,						March 31,
(In thousands)	2026			2025			2026	2025
Net earnings	$	33,556			26,383		62,247	46,690
Plus: Interest expense, net		2,399			2,195		5,279	4,452
Plus: Income tax expense		10,308			8,037		17,095	13,527
Consolidated EBIT from continuing operations	$	46,263			36,615		84,621	64,669

-A&D

EBIT in the second quarter of 2026 was $43.0 million (28.6% of net sales) compared to $24.2 million (27.0% of net sales) in the second quarter of 2025. EBIT in the first six months of 2026 was $81.0 million (27.5% of net sales) compared to $41.7 million (24.3% of net sales) in the first six months of 2025. The increase in EBIT in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly driven by leverage on higher sales volumes as mentioned above, and price increases, partially offset by inflationary pressures and unfavorable mix.

-USG

EBIT in the second quarter of 2026 was $22.5 million (24.0% of net sales) compared to $20.8 million (22.9% of net sales) in the second quarter of 2025. EBIT in the first six months of 2026 was $42.0 million (23.2% of net sales) compared to $41.3 million (23.3% of net sales) in the first six months of 2025. The increase in EBIT in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly driven by leverage on higher sales volumes at Doble and price increases and mix, partially offset by lower sales volumes at NRG, and inflationary pressures. EBIT was negatively impacted by $0.6 million of restructuring charges (primarily severance) in the first six months of 2026.

-Test

EBIT in the second quarter of 2026 was $8.8 million (13.4% of net sales) compared to $6.4 million (12.4% of net sales) in the second quarter of 2025. EBIT in the first six months of 2026 was $16.8 million (13.6% of net sales) compared to $10.8 million (11.1% of net sales) in the first six months of 2025. The increase in EBIT in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly due to higher sales volumes and price increases partially offset by inflationary pressures. EBIT was negatively impacted by $1.3 million and $0.4 million in the first six months of 2026 and 2025, respectively, by restructuring charges (primarily asset write-offs, contract termination charges and severance).

–Corporate

Corporate costs included in EBIT were $28.0 million and $55.2 million in the second quarter and first six months of 2026, respectively, compared to $14.8 million and $29.1 million in the corresponding periods of 2025. The increase in Corporate costs in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly due to an increase in acquisition related amortization due to the Maritime acquisition, and an increase in share-based compensation costs and acquisition related costs.

INTEREST EXPENSE, NET

Interest expense was $2.4 million and $5.3 million in the second quarter and first six months of 2026, respectively, and $2.2 million and $4.5 million in the corresponding periods of 2025. The increase in interest expense in the second quarter and first six months of 2026 compared to the corresponding periods of 2025 was mainly due to higher average outstanding borrowings due to the Maritime acquisition in April 2025. The weighted average outstanding borrowings were $168 million and $170 million for the three and six-month periods ending March 31, 2026 and $100 million and $111 million for the three and six-month periods ending March 31, 2025.

INCOME TAX EXPENSE

The second quarter 2026 effective income tax rate was 23.5% compared to 23.3% in the second quarter of 2025. The effective income tax rate in the first six months of 2026 was 21.5% compared to 22.5% for the first six months of 2025. Income tax expense in the first six months of 2026 was favorably impacted by additional tax benefits related to the vesting of share-based compensation awards.

CAPITAL RESOURCES AND LIQUIDITY

The Company’s overall financial position and liquidity remain strong. Working capital (current assets less current liabilities) increased to $226.4 million at March 31, 2026 from $180.4 million at September 30, 2025. Inventories increased $19.3 million during this period due to a $7.7 million increase within the A&D segment, a $9.1 million increase within the USG segment and a $2.5 million increase within the Test segment primarily from an increase in work-in-process and raw materials inventories due to timing of manufacturing existing orders. Contract assets increased $12.8 million primarily within the A&D segment (Maritime) due to timing. Contract liabilities increased $52.8 million primarily within the A&D segment (Globe and Maritime) due to timing of payments received from customers.

Net cash provided by operating activities from continuing operations was $134.6 million and $46.3 million in the first six months of 2026 and 2025, respectively. The increase in net cash provided by operating activities in the first six months of 2026 as compared to the first six months of 2025 was mainly driven by lower working capital requirements and higher earnings.

Capital expenditures for continuing operations were $13.1 million and $14.9 million in the first six months of 2026 and 2025, respectively. In addition, the Company incurred expenditures for capitalized software and other intangible assets from continuing operations of $4.8 million and $5.5 million in the first six months of 2026 and 2025, respectively.

Credit Facility

At March 31, 2026, the Company had approximately $440 million available to borrow under its bank credit facility, a $250 million increase option, and $92.3 million cash on hand. At March 31, 2026, the Company had $145 million of outstanding borrowings under the Credit Facility and Incremental Facility in addition to outstanding letters of credit of $14.5 million. Cash flow from operations and borrowings under the Company’s credit facility are expected to meet the Company’s capital requirements and operational needs for the foreseeable future. The Company’s ability to access the additional $250 million increase option of the credit facility is subject to acceptance by participating or other outside banks.

Acquisition

During the first six months of fiscal 2026, the Company paid $10.2 million consisting of a $5.1 million working capital settlement and a $5.1 million group tax relief payment, both related to the Maritime acquisition.

Divestiture

During the second quarter of 2026, the Company received a $1.5 million, net, working capital settlement related to the sale of VACCO. In addition, during the second quarter of 2026, the Company paid approximately $59 million in cash taxes related to the gain on sale of VACCO.

Subsequent Event

Dividends

A dividend of $0.08 per share, totaling $2.1 million, was paid on October 16, 2025 to stockholders of record as of October 2, 2025. A dividend of $0.08 per share, totaling $2.1 million, was paid on January 16, 2026 to stockholders of record as of January 2, 2026. Subsequent to March 31, 2026, a quarterly dividend of $0.08 per share, totaling $2.1 million, was paid on April 17, 2026 to stockholders of record as of April 2, 2026.

CRITICAL ACCOUNTING POLICIES

Management has evaluated the accounting policies used in the preparation of the Company’s financial statements and related notes and believes those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by Management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving Management judgments and estimates may be found in the Critical Accounting Policies section of Management’s Discussion and Analysis and in Note 1 to the condensed Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

OTHER MATTERS

Contingencies

As a normal incident of the business in which the Company is engaged, various claims, charges and litigation are asserted or commenced against the Company. Additionally, the Company is currently involved in various stages of investigation and remediation relating to environmental matters. In the opinion of Management, the aggregate costs involved in the resolution of these matters, and final judgments, if any, which might be rendered against the Company, are adequately reserved, are covered by insurance, or would not have a material adverse effect on the Company’s results from operations, capital expenditures, or competitive position.

FORWARD LOOKING STATEMENTS

Statements contained in this Form 10-Q regarding future events and the Company’s future results that reflect or are based on current expectations, estimates, forecasts, projections or assumptions about the Company’s performance and the industries in which the Company operates are considered “forward-looking statements” within the meaning of the safe harbor provisions of the Federal securities laws. These may include, but are not necessarily limited to, statements about: the strength of certain end markets served by the Company, and the timing of the recovery of certain end markets which the Company serves; the adequacy of the Company’s credit facility and the Company’s ability to increase it; the outcome of current litigation, claims and charges; the determination of the current portion of the Company’s long-term debt and the timing of its repayment; future revenues from remaining performance obligations; fair values of reporting units; the deductibility of goodwill; estimates and assumptions that affect the reported values of assets and liabilities; the future recognition of compensation cost related to share-based compensation arrangements; the Company’s ability to hedge against or otherwise manage market risks through the use of derivative financial instruments; the extent to which hedging gains or losses will be offset by losses or gains on related underlying exposures; and any other statements contained herein which are not strictly historical. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, estimates, variations of such words, and similar expressions are intended to identify such forward-looking statements.

Investors are cautioned that such statements are only predictions and speak only as of the date of this Form 10-Q, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment, including but not limited to those described in Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and the following: the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars including the conflicts involving Iran and Lebanon, elections, political changes, tariffs and trade disputes, terrorist activities, cyberattacks or natural disasters on the Company’s operations and those of the Company’s customers and suppliers; disruptions in manufacturing or delivery arrangements due to shortages or unavailability of materials or components; restrictions or closures of critical supply routes such as the Strait of Hormuz; other supply chain disruptions; inability to access work sites; the timing and content of future contract awards or customer orders; the timely appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties or data breaches; the availability of selected acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; material changes in the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and taxation; changes in interest, inflation and employment rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration and performance of recently acquired businesses.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company’s operations result primarily from changes in interest rates and changes in foreign currency exchange rates. The Company is exposed to market risk related to changes in interest rates and selectively uses derivative financial instruments, including forward contracts and swaps, to manage these risks. The Company’s Canadian subsidiary Morgan Schaffer enters into foreign exchange contracts to manage foreign currency risk as a portion of their revenue is denominated in U.S. dollars. All derivative instruments are reported on the balance sheet at fair value. For derivative instruments designated as cash flow hedges, the gain or loss on the respective derivative is deferred in accumulated other comprehensive income until recognized in earnings with the underlying hedged item. There has been no material change to the Company’s market risks since September 30, 2025.

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of Management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of that date. During 2025, the Company acquired the Signature Management & Power business (Maritime). The Company is currently in the process of integrating Maritime into its assessment of its internal control over financial reporting. In accordance with the SEC’s published guidance, Management’s assessment, and conclusions on the effectiveness of our disclosure controls and procedures as of March 31, 2026, excludes an assessment of the internal control over financial reporting of Maritime. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Other than as described above with respect to Maritime, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not repurchase any shares during the second quarter of 2026.

ITEM 5. OTHER INFORMATION

During the second quarter of fiscal 2026, no director or officer (as defined in Securities and Exchange Commission Rule 16-a-1(f)) of the Company adopted or terminated:

(i)

Any contract, instruction or written plan for the purchase or sale of Company securities intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement”); or

(ii)

Any “non-Rule 10-b5-1 trading arrangement” as defined in Item 408(c) of SEC Regulation S-K.

ITEM 6. EXHIBITS

Exhibit Number	Description	Document Location

3.1(a)	Restated Articles of Incorporation	Exhibit 3(a) to the Company’s Form 10-K for the fiscal year ended September 30, 1999

3.1(b)	Amended Certificate of Designation, Preferences and Rights of Series A Participating Cumulative Preferred Stock of the Registrant	Exhibit 4(e) to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2000

3.1(c)	Articles of Merger effective July 10, 2000	Exhibit 3(c) to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2000

3.1(d)	Amendment of Articles of Incorporation effective February 5, 2018	Exhibit 3.1 to the Company’s Form 8-K filed February 7, 2018

3.2	Bylaws	Exhibit 3.1 to the Company’s Form 8-K filed November 22, 2022

4.1(a)	Amended and Restated Credit Agreement dated August 30, 2023	Exhibit 10.1 to the Company’s Form 8-K filed September 6, 2023

4.1(b)	Amendment No. 1 to the Amended and Restated Credit Agreement dated August 30, 2023	Exhibit 10.1(c) to the Company’s Form 10-K for the fiscal year ended September 30, 2024

10.1	Twelfth Amendment and Restatement of Employee Stock Purchase Plan, effective January 30, 2026	Exhibit 10.1 to the Company’s Form 8-K filed February 5, 2026

31.1	Certification of Chief Executive Officer	Filed herewith

31.2	Certification of Chief Financial Officer	Filed herewith

32	Certification of Chief Executive Officer and Chief Financial Officer	Filed herewith

101.INS	XBRL Instance Document*	Submitted herewith

101.SCH	XBRL Schema Document*	Submitted herewith

101.CAL	XBRL Calculation Linkbase Document*	Submitted herewith

101.DEF	XBRL Definition Linkbase Document*	Submitted herewith

101.LAB	XBRL Label Linkbase Document*	Submitted herewith

101.PRE	XBRL Presentation Linkbase Document*	Submitted herewith

104	Cover Page Interactive Data File (contained in Exhibit 101)	Submitted herewith

*	Exhibit 101 to this report consists of documents formatted in XBRL (Extensible Business Reporting Language). The financial information contained in the XBRL – related documents is “unaudited” or “unreviewed”.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ESCO TECHNOLOGIES INC.

	/s/ Christopher L. Tucker
	Christopher L. Tucker
	Senior Vice President and Chief Financial Officer
	(As duly authorized officer and principal accounting and financial officer of the registrant)

Dated: May 11, 2026

ESCO TECHNOLOGIES INC 10-Q