ESE

ESCO TECHNOLOGIES INC

NYSE · TECHNOLOGY · COMMUNICATIONS EQUIPMENT, NEC

232.10

−0.89 −0.38%

USD · close Oct 23

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MKT CAP $6BP/E 19.1DIV YIELD —FCF YIELD 3.45%REV TTM $1.3B +27.0%NET INCOME $314.8M +174.1%NET DEBT $11.8M52W 195.39 – 354.90SEC XBRL · TTM TO Invalid Date

How ESE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

77%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−14

words, now 4,457

New in FY2025

In 2025, approximately 23% of our revenues from continuing operations were generated from sales to the U.S.
These sales are dependent on government funding of the underlying programs, which is generally subject to annual Congressional appropriations and periodic authorization of increases in the Government debt ceiling, and they may therefore be adversely affected not only by failure to obtain timely and adequate appropriations but also by extended Government shutdowns or by changes in Government spending priorities.
A significant portion of Globe’s and Westland’s sales involve major U.S.
As of September 30, 2025, our twelve-month backlog was approximately $722 million, which represents confirmed orders we believe will be recognized as revenue within the next twelve months.
In 2025, approximately 34% of our net sales from continuing operations were to customers outside the United States.
As a result, we are subject to the risks of doing business internationally, including: ● Executive branch actions such as the imposition of tariffs on imports of component parts or raw materials exceeding our ability to pass them along to our customers, or changes in regulatory requirements; ● Other changes in the global trade environment, including disputes with authorities in non-U.S. jurisdictions, including international trade authorities, that could impact sales and/or delivery of products and services outside the U.S. and/or impose costs on our customers in the form of import duties or penalties attributable to the importation of our products; ● Trade restrictions against certain foreign-made products or entities may adversely affect our business and our ability to compete in certain markets; ● Ongoing trade tensions between the U.S. and other countries including China as well as traditional trading partners such as Canada and the E.U., which involve restrictions on the availability of raw materials or cause U.S. goods to be viewed in a less favorable light by non-U.S. customers; ● Changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements; ● Future decisions of the UK Government which might significantly reduce funding for its naval programs; ● Fluctuations in international currency exchange rates; ● Volatility in international political and economic environments and changes in non-U.S. national priorities and budgets, which can lead to delays or fluctuations in orders; ● Imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions (such as those imposed on Russia and Iran) and other trade restrictions; ● Compliance with a variety of non-U.S. laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and ● Unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.
For example: ● Our Test segment does significant business in Asia, and changes in the Chinese political climate, or economic or territorial aggression by China against Taiwan or other nearby countries, could significantly and negatively affect our business; also, cash generated by our business in China may not be available to fund our operations or other uses outside China due to possible imposition of restrictions or limitations on our ability to repatriate the cash, and although we repatriate cash on a regular basis to mitigate this risk, we may not be able to continue to do this in the future; ● Several of our subsidiaries are based in Europe and could be negatively impacted by the ongoing conflicts between Russia and Ukraine, between Israel and Hamas in Gaza and Lebanon, or between Israel and Iran; if any of these conflicts were to expand in scope or spread beyond these countries, or if other conflicts were to develop, we would expect an increasingly unfavorable impact on our global business environment; and ● Our international sales are also subject to other risks inherent in foreign commerce, including currency fluctuations and devaluations, differences in foreign laws, uncertainties as to enforcement of contract or intellectual property rights, and difficulties in negotiating and resolving disputes with our foreign customers.
As another example, Globe has a single supplier of critical materials for a significant military production program, and if this supplier were to discontinue producing these components in a timely manner the need to secure another source could pose a risk to or at least a significant delay in the production program.
Import tariffs or other increases in the prices of raw materials (such as steel, copper, nickel, zinc, wood and petrochemical products) could have an adverse impact on our business by, among other things, increasing costs and reducing margins.
Aerospace-grade titanium, an important raw material for our A&D segment, may at times be in short supply; in addition, although we try to tie our supplier pricing to long-term contracts this is not always possible.
As certain aircraft are retired and replaced by newer aircraft, if we are unable to offer suitable products for the newer aircraft there could be a corresponding decrease in sales associated with our products which could adversely affect our operating results.
We have been and are currently involved as a responsible party in several ongoing investigations and remediations of contaminated third-party owned properties.
In addition, acquisitions of other companies, including but not limited to those encompassed in the Maritime acquisition, involve numerous risks, including unexpected or unavoidable delays in consummation, possible failure to satisfy preconditions to closing or comply with post-closing terms, difficulties in the integration of the operations, technologies and products of the acquired companies, the potential exposure to unanticipated and undisclosed liabilities, the potential that expected benefits or synergies are not realized and that operating costs increase, the potential loss of key personnel, suppliers or customers of acquired businesses and the diversion of Management’s time and attention from other business concerns.
Provisions in our articles of incorporation, bylaws and Missouri corporate laws could make us less attractive to investors or make it more difficult for a third party to acquire us, and could thereby adversely affect the market price of our common stock.
Our articles of incorporation and bylaws contain certain provisions which could make us less attractive to prospective investors or discourage potential takeover attempts, including a limitation on the shareholders’ ability to call special meetings of shareholders; advance notice requirements to nominate candidates for election as directors or to propose matters for action at a meeting of shareholders; a classified board of directors, which means that only approximately one-third of our directors are elected each year; and the authority of our board of directors to issue, without shareholder approval, preferred stock with such terms as the board may determine.
These provisions could reduce major shareholders’ influence over corporate policy or impede a merger or other change of control not approved by our board of directors, which could discourage investors and in some circumstances reduce the market price of our common stock.

Gone since FY2024

In 2024, approximately 27% of our revenues have been generated from sales to the U.S.
These sales are dependent on government funding of the underlying programs, which is generally subject to annual Congressional appropriations and periodic authorization of increases in the Government debt ceiling, and they may therefore be adversely affected not only by failure to obtain timely and adequate appropriations but also by extended Government shutdowns or by changes in priorities following the 2025 change in the Administration.
A significant portion of VACCO’s, Globe’s and Westland’s sales involve major U.S.
Government programs such as NASA’s Space Launch System (SLS) and U.S.
As of September 30, 2024, our twelve-month backlog was approximately $608 million, which represents confirmed orders we believe will be recognized as revenue within the next twelve months.
In 2024, approximately 28% of our net sales were to customers outside the United States.
As a result, we are subject to the risks of doing business internationally, including: ● Changes in regulatory requirements or other executive branch actions, such as Executive Orders; ● Changes in the global trade environment, including disputes with authorities in non-U.S. jurisdictions, including international trade authorities, that could impact sales and/or delivery of products and services outside the U.S. and/or impose costs on our customers in the form of tariffs, duties or penalties attributable to the importation of our products; ● Trade restrictions against certain foreign-made products or entities may adversely affect our business and our ability to compete in certain markets; ● Our business may also be impacted by the ongoing trade tensions between the U.S. and China which are causing U.S. goods to be viewed in a less favorable light by Chinese customers; ● Changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements; ● Fluctuations in international currency exchange rates; ● Volatility in international political and economic environments and changes in non-U.S. national priorities and budgets, which can lead to delays or fluctuations in orders; ● Imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions (such as those imposed on Russia and Iran) and other trade restrictions; ● Compliance with a variety of non-U.S. laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and ● Unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.
For example: ● Our Test segment does significant business in Asia, and changes in the Chinese political climate, or economic or territorial aggression by China against Taiwan or other nearby countries, could significantly and negatively affect our business; also, cash generated by our business in China may not be available to fund our operations or other uses outside China due to possible imposition of restrictions or limitations on our ability to repatriate the cash, and although we attempt to repatriate cash on a regular basis to mitigate this risk, we may not be able to continue to do this in the future; ● Several of our subsidiaries are based in Europe and could be negatively impacted by the ongoing conflicts between Russia and Ukraine, between Israel and Hamas in Gaza and Lebanon, or between Israel and Iran; if any of these conflicts were to expand in scope or spread beyond these countries, or if other conflicts were to develop, we would expect an increasingly unfavorable impact on our global business environment; and ● Our international sales are also subject to other risks inherent in foreign commerce, including currency fluctuations and devaluations, differences in foreign laws, uncertainties as to enforcement of contract or intellectual property rights, and difficulties in negotiating and resolving disputes with our foreign customers.
As another example, Globe has a single supplier of critical materials for a significant military production program, and if this supplier were to discontinue producing these components in a timely manner the need to secure another source could pose a risk to the production program.
Increases in the prices of raw materials (such as steel, copper, nickel, zinc, wood and petrochemical products) could have an adverse impact on our business by, among other things, increasing costs and reducing margins.
Aerospace-grade titanium and gaseous helium, important raw materials for our A&D segment, may at times be in short supply; in addition, although we try to tie our supplier pricing to long-term contracts this is not always possible, and we are experiencing price inflation on a number of products.
Further, some of Doble’s items of equipment which are provided to its customers for their use are in the maturity of their life cycles, which creates the risk that replacement components may be unavailable or available only at increased costs.
We have experienced COVID-related short-term disruptions in the supply chain which have periodically resulted in extended lead times and cost increases, and the long term impacts of these disruptions are uncertain.
As certain aircraft are retired and replaced by newer aircraft, if we were unable to offer suitable products for the newer aircraft there could be a corresponding decrease in sales associated with our products which could adversely affect our operating results.
We are currently involved as a responsible party in several ongoing investigations and remediations of contaminated third-party owned properties.
In addition, acquisitions of other companies, including but not limited to those encompassed in the SM&P Acquisition, involve numerous risks, including unexpected or unavoidable delays in consummation, possible failure to satisfy preconditions to closing or comply with post-closing terms, difficulties in the integration of the operations, technologies and products of the acquired companies, the potential exposure to unanticipated and undisclosed liabilities, the potential that expected benefits or synergies are not realized and that operating costs increase, the potential loss of key personnel, suppliers or customers of acquired businesses and the diversion of Management’s time and attention from other business concerns.
Provisions in our articles of incorporation, bylaws and Missouri law could make it more difficult for a third party to acquire us and could discourage acquisition bids or a change of control, and could adversely affect the market price of our common stock.
Our articles of incorporation and bylaws contain certain provisions which could discourage potential hostile takeover attempts, including: a limitation on the shareholders’ ability to call special meetings of shareholders; advance notice requirements to nominate candidates for election as directors or to propose matters for action at a meeting of shareholders; a classified board of directors, which means that approximately one-third of our directors are elected each year; and the authority of our board of directors to issue, without shareholder approval, preferred stock with such terms as the board may determine.
These provisions could impede a merger or other change of control not approved by our board of directors, which could discourage takeover attempts and in some circumstances reduce the market price of our common stock.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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