ESCO Technologies (ESE) Q2 2026 earnings summary

Executive summary

• Q2 2026 delivered strong growth in orders, sales, and profitability across all segments, with significant contributions from Navy, Aerospace & Defense, Test, and the Maritime acquisition.

• Backlog reached a record $1.5B, up 29.7% from September 2025, with a book-to-bill ratio of 1.22.

• Adjusted EPS rose 63% year-over-year to $1.91, and adjusted EBIT margin improved by 370 basis points to 21.7%.

• Announced acquisition of Megger Group Limited for $2.35B, expected to close in Q1 fiscal 2027, with integration planning underway.

Financial highlights

• Q2 2026 sales increased 33.5% year-over-year to $309.3M, with organic growth and $47.8M from Maritime; YTD sales up 34.2% to $599M.

• Orders increased 42% year-over-year, with 22% organic growth and $53M from Maritime.

• Adjusted EBIT grew 60.8% to $67.2M; adjusted EBITDA up 53% to $76.4M; GAAP EPS from continuing operations was $1.29, up 26.5%.

• Operating cash flow nearly tripled to $135M for the first six months, driven by advanced Navy contract payments.

Outlook and guidance

• Full-year 2026 Adjusted EPS guidance raised to $8.00–$8.25 (33–37% growth); Q3 expected at $2.05–$2.15 (28–34% growth).

• FY26 revenue guidance maintained at $1.29–$1.33B (18–21% growth); 55% of backlog expected to convert to revenue in the next twelve months.

• Guidance excludes Megger acquisition, which is expected to be accretive to EPS in the first year post-close.