ESCO TECHNOLOGIES INC (ESE)

ESCO Technologies Inc. is a global provider of highly engineered filtration and fluid control products and integrated propulsion systems for the aviation, navy, space and process markets, as well as composite-based products and solutions for navy, defense and industrial customers. It is also an industry leader in radio frequency (RF) shielding and electromagnetic compatibility (EMC) test products, and a provider of diagnostic instruments, software and services for electric utilities, renewable energy and industrial power users. The company pursues a multi-segment strategy meant to lower risk through diversification and to generate long-term growth through innovation, product expansion and acquisitions. Its stock trades on the NYSE under "ESE" and its fiscal year ends September 30.

ESCO reports three segments. Aerospace & Defense (about 41% of fiscal 2023 revenue) includes VACCO, PTI, Crissair, Globe Composite Solutions, Westland Technologies and Mayday Manufacturing. It designs and makes hydraulic filter elements, fluid control devices, precision machined components, filter mechanisms for satellite micro-propulsion, custom filters for aircraft and submarines, products that reduce vibration and acoustic signatures for U.S. Navy vessels, and miniature electro-explosive devices for ejection seats and missile arming. Utility Solutions Group (about 36%) includes Doble, Altanova, Morgan Schaffer, NRG Systems and Phenix. Doble provides diagnostic test instruments, condition monitoring, consulting and testing services for high-voltage grid equipment, and NRG makes decision support tools for wind and solar. The RF Test & Measurement segment (about 23%), operating as ETS-Lindgren, supplies RF test facilities, measurement systems, acoustic test enclosures, shielded rooms, secure communication facilities, absorptive materials, antennas, probes, software, and accredited calibration and testing services.

Customers include aerospace and defense contractors, the U.S. Government, electric power grid operators, renewable energy developers, and customers in the acoustics, medical, health and safety, electronics, wireless communications, automotive and defense markets. Direct and indirect sales to the U.S. Government, mainly in A&D, were about 26% of fiscal 2023 revenue, largely under firm fixed-price contracts that can be terminated for the Government's convenience. International customers accounted for about 30% of revenue. Altanova, based in Taino, Italy, is strong in Europe and Asia and represents USG products outside the Americas.

Products are sold through distributors, sales representatives, direct sales teams and in-house personnel. A&D has seven U.S. facilities and one in Mexico; USG has eight in the U.S., one in Canada and ten elsewhere; Test has four in the U.S. and six abroad. In fiscal 2023 ESCO merged Westland Technologies and Globe Composites under Globe's leadership in Stoughton, MA, and refocused Westland's Modesto, California site on Navy materials manufacturing. It also acquired CMT Materials and Engineered Syntactic Systems, makers of syntactic buoyancy materials, in February 2023. Earlier acquisitions were Altanova, Phenix and NEco in 2021. The company relies on patents, trademarks, copyrights and trade secrets to protect its intellectual property.