 - Q3 2020 GAAP EPS 0.72 and Adjusted EPS 0.76 - Net Debt of 47 Million, Leverage Ratio 0.95x, Liquidity of 700 Million -St. Louis, Aug. 10, 2020 GLOBE NEWSWIRE -- ESCO Technologies Inc. NYSE: ESE ESCO, or the Company today reported its operating results for the third quarter ended June 30, 2020 Q3 2020 compared to the third quarter ended June 30, 2019 Q3 2019. COVID-19 UpdateVic Richey, Chairman and Chief Executive Officer, commented, As we manage through the COVID-19 global pandemic, we continue to focus on the health and safety of our employees, customers and suppliers, thereby securing the financial well-being of the Company and supporting business continuity.While our businesses have obviously been impacted by the pandemic, Im proud of our employees commitment to supporting our customers essential industries. Our entire organization has stepped up to the challenge and drove our strong operating performance which exceeded expectations. Our solid results reflect the importance of maintaining diversity across our end-markets, as this diversity, coupled with our strong balance sheet and substantial liquidity are critical to managing todays challenges. We were able to mitigate the earnings impact of Q3 2020s sales decrease because of our diversified, multi-segment approach. Coupled with effective cost management and solid operating execution, we reported Q3 2020 Adjusted EBITDA of 35 million, consistent with Q3 2019s Adjusted EBITDA.We successfully worked our way through a challenging quarter, and Im confident that our well-tested operating model and our track record of taking effective cost management actions to reduce spending and resize the business will position us for robust growth coming out of this downturn.Our deep and experienced leadership team has us well-positioned for the future as we continue to invest in our growth initiatives both organically and through the deployment of capital on acquisitions. The long-term fundamentals of our portfolio remain strong and our goal is to emerge from this current challenge as an even stronger company.Q3 2020 Earnings ReportOn January 2, 2020, the Company announced that it had completed the sale of its Technical Packaging segment effective December 31, 2019 which resulted in gross cash proceeds of 191 million 187 million purchase price plus working capital surplus and a 77 million, or 2.93 per share net gain on the sale in Q1 2020.The financial results presented include certain non-GAAP financial measures such as EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS, as defined within the Non-GAAP Financial Measures described below. Any non-GAAP financial measures presented are reconciled to their respective GAAP equivalents.Management believes these non-GAAP financial measures are useful in assessing the ongoing operational profitability of the Companys business segments, and therefore, allow shareholders better visibility into the Companys underlying operations. See Non-GAAP Financial Measures described below.Q3 2020 GAAP EPS of 0.72 per share included 1.2 million, or 0.04 per share of incremental costs related to COVID-19 spending. Excluding the 0.04 per share impact of these discrete items resulted in Q3 2020 Adjusted EPS of 0.76 per share. Q3 2020 GAAP net earnings were 19 million.Q3 2019 GAAP EPS from continuing operations of 0.73 per share included 0.02 per share of cost reduction charges described in prior releases. The net effect of excluding the 0.02 per share of discrete items resulted in Q3 2019 Adjusted EPS of 0.75 per share, with GAAP net earnings from continuing operations of 19 million.Q3 2020 Adjusted EBITDA was 35 million, consistent with Q3 2019 Adjusted EBITDA of 35 million.Operating Highlights Net sales decreased 3 percent to 173 million in Q3 2020 compared to 178 million in Q3 2019. Aerospace Defense AD segment sales increased 1 million from Q3 2019, including 8 million in sales from Globe, coupled with 2 million increased navy and space sales at Vacco, offset by lower commercial aerospace sales due to COVID-19. Test sales increased 4 million 9 percent in Q3 2020 as a result of strong foreign chamber project sales. Sales increased to 46 million despite continuing timing delays on certain installation projects due to COVID-19 related customer closure mandates and on-site personnel restrictions at customer locations. USG sales decreased 10 million in Q3 2020 due to the timing deferrals of various project deliverables as utility customers have re-aligned their short-term maintenance and spending protocols to focus on uninterrupted power delivery due to short-term electricity demand mix changes between industrial, commercial and residential customers due to COVID-19. Maintenance deferrals also reflect various mandates restricting on-site personnel at substations, large transformers and other customer locations. SGA expenses decreased 4 million 10 percent in Q3 2020 driven by significant cost mitigation programs implemented to help offset the negative sales impact from COVID-19. SGA as a percent of sales decreased to 21 percent in Q3 2020, from 23 percent in Q3 2019, despite the inclusion of Globe in the current period, and continued spending on RD and new product development to enhance future growth. Q3 2020 non-cash amortization of intangible assets increased 1 million, or 25 percent compared to Q3 2019 as a result of the Globe acquisition being included in the Q3 2020 results. Interest expense decreased in Q3 2020 due to the lower net debt outstanding and favorable interest rates. The effective income tax rate was approximately 15 percent in Q3 2020 and 19 percent in Q3 2019 as both periods were favorably impacted by ongoing tax reduction initiatives. The Q3 2020 quarterly rate was lower than expected due to favorable one-time tax strategies implemented, primarily related to foreign sourced income. Entered orders were 158 million in Q3 2020 book-to-bill of 0.91x, and were 624 million YTD 2020 book-to-bill of 1.19x, resulting in an ending backlog of 551 million at June 30, 2020, an increase of 99 million, or 22 percent, from September 30, 2019. Q3 2020 net cash provided by operating activities from continuing operations was 54 million, and included a 10 million cash payment to partially fund the previously announced pension plan termination expected to be completed in Q4 2020. Net debt total borrowings, less cash on hand was 47 million at June 30, 2020 reflecting a 0.95x leverage ratio.Chairmans CommentaryVic Richey, Chairman and Chief Executive Officer, commented, The clear highlight of Q3 2020 was the strength of our Test segment with a sales increase of 9 percent and an EBIT margin of nearly 16 percent. Our AD segment demonstrated its resilience driven by its program, product and end-market diversity, as the navy and defense markets remained strong which offset the decline in commercial aerospace. PTI, Crissair and Maydays sales decline reflected the reduction in both OEM build rates and air traffic, while Globe, Vacco and Westland outperformed on their navy submarine platforms.We expect the softness in commercial aerospace deliveries to continue for the balance of the year, but the outlook is too uncertain to determine the sales and EBIT impact from the current industry downturn. Recently, the commercial aerospace industry began seeing some initial signs of a recovery emerging as several airlines are bringing more of their idled fleet back into service and daily passenger boardings have been increasing over the past few months.The defense portion of AD, both military aerospace and navy products, is expected to remain strong for the foreseeable future given its sizeable backlog coupled with the timing of expected platform deliveries.As noted above, Test reported another solid quarter delivering a better than expected EBIT margin of nearly 16 percent, despite some delayed installation projects caused by access limitations to customer sites.We expect Test to remain relatively solid over the remainder of the year given the strength of its backlog and its served markets, primarily related to new communications technologies such as 5G and our growing shielding business. Our view of 5Gs future contributions to the Test business is favorable given the size of the investments being made by numerous large, global companies leading the development of this robust technology.As expected, USG sales remained soft in Q3 2020 as utility customers continued deferring purchase orders and maintenance-related projects so they can focus their resources on issues such as critical power delivery. Given their mandate around COVID-19 travel and site access restrictions, Dobles service business is largely on hold until these personal safety risks can be reduced.On the positive side, Dobles order pipeline of new business remains robust, especially as it relates to cyber security solutions such as the DUCe, and Im pleased to see the enthusiasm being generated in the market surrounding several new products and solutions recently introduced. We are also seeing NRGs end markets recovering as investments in renewable energy have been increasing in both wind and solar. Our new products supporting solar have been growing far better than anticipated and we expect that growth to continue.We expect Dobles customer spending softness to continue for the next few quarters before returning to normal levels. We take comfort knowing that COVID-19 does not change the fundamentals of the global utility market as society needs reliable, safe and secure electricity. While customers can defer testing and maintenance for a period of time, they cannot do it indefinitely without significantly increasing the risk of catastrophic failure. 