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~~x No¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).
~~Yes~~x 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.

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¨☐ Nox☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

(Dollars in thousands)

Three Months Ended
December 31,
2017 2016

Net earnings $ 34,671 10,727
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 1,288 (4,363 )
Net unrealized gain (loss) on derivative instruments 17 (133 )
Total other comprehensive income (loss), net of tax 1,305 (4,496 )
Comprehensive income $ 35,976 6,231


	Three Months Ended
	December 31,
	2023		2022
Net earnings	$	15,169	14,727
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		9,414	11,513
Total other comprehensive income (loss), net of tax		9,414	11,513
Comprehensive income	$	24,583	26,240

See accompanying notes to consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

December 31,
2017 September 30,
2017
ASSETS
Current assets:
Cash and cash equivalents $ 41,600 45,516
Accounts receivable, net 148,502 160,580
Costs and estimated earnings on long-term contracts, less progress billings of $45,134 and $64,099, respectively 39,045 47,286
Inventories 130,579 124,515
Other current assets 13,301 14,895
Total current assets 373,027 392,792
Property, plant and equipment, net of accumulated depreciation of $106,791 and $99,650, respectively 132,790 132,748
Intangible assets, net of accumulated amortization of $78,325 and $73,879, respectively 347,578 351,134
Goodwill 378,510 377,879
Other assets 5,843 5,891
Total assets $ 1,237,748 1,260,444

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt $ 20,000 20,000
Accounts payable 48,766 54,789
Advance payments on long-term contracts, less costs incurred of $53,206 and $59,772, respectively 28,966 22,451
Accrued salaries 21,824 32,259
Current portion of deferred revenue 25,447 28,583
Accrued other expenses 33,029 36,887
Total current liabilities 178,032 194,969
Pension obligations 30,268 30,223
Deferred tax liabilities 57,877 86,378
Other liabilities 24,502 21,956
Long-term debt 240,000 255,000
Total liabilities 530,679 588,526
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 30,468,824 and 30,468,824 shares, respectively 305 305
Additional paid-in capital 290,984 289,785
Retained earnings 549,322 516,718
Accumulated other comprehensive loss, net of tax (26,003 ) (27,308 )
814,608 779,500
Less treasury stock, at cost: 4,632,922 and 4,635,622 common shares, respectively (107,539 ) (107,582 )
Total shareholders’ equity 707,069 671,918
Total liabilities and shareholders’ equity $ 1,237,748 1,260,444


	December 31,		September 30,
	2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	51,396		41,866
Accounts receivable, net of allowance for credit losses of $2,274 and $2,264, respectively		194,395		198,557
Contract assets, net		138,393		138,633
Inventories		202,577		184,067
Other current assets		16,441		17,972
Total current assets		603,202		581,095
Property, plant and equipment, net of accumulated depreciation of $180,909 and $174,698, respectively		159,262		155,484
Intangible assets, net of accumulated amortization of $212,750 and $204,881, respectively		422,053		392,124
Goodwill		537,601		503,177
Operating lease assets		38,685		39,839
Other assets		11,723		11,495
Total assets	$	1,772,526		1,683,214

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings	$	20,000		20,000
Accounts payable		77,960		86,973
Contract liabilities, net		121,149		112,277
Accrued salaries		33,944		43,814
Accrued other expenses		51,640		51,587
Total current liabilities		304,693		314,651
Deferred tax liabilities		83,802		75,531
Non-current operating lease liabilities		35,709		36,554
Other liabilities		42,228		43,336
Long-term debt		152,000		82,000
Total liabilities		618,432		552,072
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 30,800,586 and 30,781,699 shares, respectively		308		308
Additional paid-in capital		305,283		304,850
Retained earnings		1,002,420		989,315
Accumulated other comprehensive loss, net of tax		(14,555)		(23,969)
		1,293,456		1,270,504
Less treasury stock, at cost: 4,995,414 and 4,995,414 common shares, respectively		(139,362)		(139,362)
Total shareholders’ equity		1,154,094		1,131,142
Total liabilities and shareholders’ equity	$	1,772,526		1,683,214

See accompanying notes to consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

Three Months Ended
December 31,
2017 2016
Cash flows from operating activities:
Net earnings $ 34,671 10,727
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 9,226 7,088
Stock compensation expense 1,353 1,437
Changes in assets and liabilities 4,507 (2,053 )
Effect of deferred taxes (28,501 ) (1,393 )
Change in deferred revenue and costs, net (3,099 ) (333 )
Pension contributions (360 ) -
Other - 263
Net cash provided by operating activities 17,797 15,736

Cash flows from investing activities:
Acquisition of business, net of cash acquired (233 ) (75,000 )
Additions to capitalized software (2,083 ) (1,433 )
Capital expenditures (3,606 ) (6,989 )
Net cash used by investing activities (5,922 ) (83,422 )

Cash flows from financing activities:
Proceeds from long-term debt 15,000 90,000
Principal payments on long-term debt (30,000 ) (20,000 )
Dividends paid (2,067 ) (2,057 )
Other 17 (134 )
Net cash (used) provided by financing activities (17,050 ) 67,809
Effect of exchange rate changes on cash and cash equivalents 1,259 (2,193 )
Net decrease in cash and cash equivalents (3,916 ) (2,070 )
Cash and cash equivalents, beginning of period 45,516 53,825
Cash and cash equivalents, end of period $ 41,600 51,755

Supplemental cash flow information:
Interest paid $ 2,053 509
Income taxes paid (including state and foreign) 1,025 1,026


	Three Months Ended
	December 31,
	2023		2022
Cash flows from operating activities:
Net earnings	$	15,169	14,727
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		13,452	12,367
Stock compensation expense		2,180	1,860
Changes in assets and liabilities		(22,539)	(36,920)
Effect of deferred taxes		484	(1,042)
Net cash provided (used) by operating activities		8,746	(9,008)
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(56,179)	—
Additions to capitalized software		(2,942)	(2,795)
Capital expenditures		(7,848)	(4,791)
Net cash used by investing activities		(66,969)	(7,586)
Cash flows from financing activities:
Proceeds from long-term debt and short-term borrowings		99,000	17,000
Principal payments on long-term debt and short-term borrowings		(29,000)	(38,000)
Dividends paid		(2,064)	(2,067)
Purchases of common stock into treasury		—	(4,147)
Other		(1,432)	(2,412)
Net cash provided (used) by financing activities		66,504	(29,626)
Effect of exchange rate changes on cash and cash equivalents		1,249	418
Net increase (decrease) in cash and cash equivalents		9,530	(45,802)
Cash and cash equivalents, beginning of period		41,866	97,724
Cash and cash equivalents, end of period	$	51,396	51,922

Supplemental cash flow information:
Interest paid	$	2,520	1,875
Income taxes paid		246	200

See accompanying notes to consolidated financial statements.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	1. BASIS OF PRESENTATION

The accompanying 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 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, 2017.~~

The Company’s results for the three-month ~~periods~~period ended December 31, ~~2017~~2023 are not necessarily indicative of the results for the entire ~~2018~~2024 fiscal year. References to the first quarters of ~~2018~~2024 and ~~2017~~2023 represent the fiscal quarters ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

The preparation of financial statements in conformity with GAAP requires ~~Management~~management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

2.	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 dilutive common share options and vesting of performance-accelerated restricted ~~shares (restricted shares)~~stock unit awards and time - vested restricted stock unit awards by using the treasury stock method. ~~There are no anti-dilutive shares.~~ The number of shares used in the calculation of earnings per share for each period presented is as follows (in thousands):


	Three Months
	Ended December 31,
	2023	2022
Weighted Average Shares Outstanding — Basic	25,797	25,863
Dilutive Restricted Shares	49	80
Adjusted Shares — Diluted	25,846	25,943

Three Months
Ended December 31,
2017 2016

Weighted Average Shares Outstanding - Basic 25,836 25,720
Dilutive Options and Restricted Shares 244 259

Adjusted Shares - Diluted 26,080 25,979

3. ACQUISITION

On November 9, 2023, the Company acquired MPE Limited (MPE), based in the United Kingdom, for a purchase price of approximately $56.2 million, net of cash acquired. MPE is a leading global manufacturer of high-performance EMC/EMP filters and capacitor products for military, utility, telecommunication, and other critical infrastructure applications. Since the date of acquisition, the operating results for the MPE business have been included as part of ETS-Lindgren in the Test segment. The acquisition date fair value of the assets acquired and liabilities assumed primarily were as follows: approximately $0.4 million of accounts receivable, $1.1 million of inventory, $1.7 million of property, plant and equipment, $0.7 million of accounts payable and accrued expenses, $7.8 million of deferred tax liabilities, and $31.1 million of identifiable intangible assets, mainly consisting of customer relationships totaling $29.1 million. The acquired goodwill of $30.3 million related to excess value associated with opportunities to expand the services and products that the Company can offer to its customers. The Company does not anticipate that the goodwill will be deductible for tax purposes.

4. SHARE-BASED COMPENSATION

The Company provides compensation benefits to certain key employees under several share-based plans providing for performance-accelerated and/or time-vested restricted ~~shares (restricted shares),~~stock unit awards, and to non-employee directors under a ~~non-employee directors~~separate compensation plan.

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

Compensation expense related to ~~the restricted share~~these awards was ~~$1.1~~$1.9 million and ~~$1.2~~$1.6 million for the three-month periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. There were ~~337,325~~234,036 non-vested shares outstanding as of December 31, ~~2017.~~2023.

Non-Employee Directors Plan

Compensation expense related to the non-employee director grants was $0.3 million and ~~$0.2~~$0.3 million for the three-month periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

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 ~~$1.4~~$2.2 million and ~~$1.4~~$1.9 million for the ~~three -month~~three-month periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. The total income tax benefit recognized in results of operations for share-based compensation arrangements was ~~$0.4~~$0.2 million and ~~$0.5~~$0.1 million for the three-month periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. As of December 31, ~~2017,~~2023 there was ~~$5.3~~$15.5 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 ~~1.3~~2.0 years.

4.	5. INVENTORIES

Inventories consist of the following:


					December 31,		September 30,
(In thousands)	December 31, 2017		September 30, 2017		2023		2023

Finished goods	$	29,013		28,127	$	37,996	34,577
Work in process		46,668		43,750		54,656	42,178
Raw materials		54,898		52,638		109,925	107,312
Total inventories	$	130,579		124,515	$	202,577	184,067

GOODWILL AND OTHER INTANGIBLE ASSETS

Included on the Company’s Consolidated Balance Sheets at December 31, ~~2017~~2023 and September 30, ~~2017~~2023 are the following intangible assets gross carrying amounts and accumulated ~~amortization:~~amortization from continuing operations:


					December 31,		September 30,
(Dollars in thousands)	December 31, 2017		September 30, 2017		2023		2023
Goodwill	$	378,510		377,879	$	537,601	503,177


Intangible assets with determinable lives:
Patents
Gross carrying amount	$	928		928	$	2,517	2,516
Less accumulated amortization		757		750
Less: accumulated amortization						1,253	1,218
Net	$	171		178	$	1,264	1,298


Capitalized software
Gross carrying amount	$	63,842		63,007	$	125,237	121,883
Less accumulated amortization		36,081		34,382
Less: accumulated amortization						83,709	80,774
Net	$	27,761		28,625	$	41,528	41,109


Customer relationships
Gross carrying amount	$	182,266		181,891	$	328,624	296,927
Less accumulated amortization		39,922		37,364
Less: accumulated amortization						117,755	113,311
Net	$	142,344		144,527	$	210,869	183,616


Other
Gross carrying amount	$	5,336		5,373	$	15,216	14,232
Less accumulated amortization		1,565		1,383
Less: accumulated amortization						10,033	9,578
Net	$	3,771		3,990	$	5,183	4,654
Intangible assets with indefinite lives:
Trade names	$	173,531		173,813	$	163,209	161,447

The changes in the carrying amount of goodwill attributable to each business segment for the three months ended December 31, ~~2017 is~~2023 are as follows:

(Dollars in millions) USG Test Filtration Packaging Total
Balance as of September 30, 2017 250.2 34.1 73.7 19.9 377.9
Acquisition activity – working capital adj
0.2 - - - 0.2
Foreign currency translation and other - - - 0.4 0.4
Balance as of December 31, 2017 $ 250.4 34.1 73.7 20.3 378.5


					Aerospace
(Dollars in millions)	USG		Test		& Defense	Total
Balance as of September 30, 2023	$	353.6		34.0	115.6	503.2
Acquisition activity		—		30.3	—	30.3
Foreign currency translation		3.3		0.8	—	4.1
Balance as of December 31, 2023	$	356.9		65.1	115.6	537.6

6.	7. BUSINESS SEGMENT INFORMATION

The Company is organized based on the products and services that it offers and classifies its business operations in ~~four~~three reportable segments for financial reporting purposes: ~~Filtration/Fluid Flow (Filtration), RF Shielding and Test (Test)~~Aerospace & Defense (A&D), Utility Solutions Group (USG) and ~~Technical Packaging.~~RF Test & Measurement (Test). The ~~Filtration~~A&D segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), ~~Westland Technologies Inc. (Westland),~~Globe Composite Solutions, LLC (Globe) and Mayday Manufacturing Co. ~~and its affiliate Hi-Tech Metals, Inc. (collectively referred to as Mayday)~~(Mayday). 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 ~~commercial~~ aerospace ~~applications,~~and defense applications; unique filter mechanisms used in micro-propulsion devices for satellites, ~~and~~ custom designed filters for manned aircraft and ~~unmanned aircraft; manufacture elastomeric-based~~submarines, products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, ~~reduction solutions for the~~and other communications, sealing, surface control and hydrodynamic related applications to enhance U.S. ~~Navy; and manufacture landing gear~~Navy maritime survivability; precision-tolerance machined components for the aerospace and defense ~~industry. The Test segment’s operations consist primarily of ETS-Lindgren Inc. (ETS-Lindgren). ETS-Lindgren is an industry leader~~industry; metal processing services; and miniature electro-explosive devices utilized in ~~providing its customers with the ability to identify, measure~~mission-critical defense and ~~contain magnetic, electromagnetic and acoustic energy.~~ aerospace applications.

The USG segment’s operations consist primarily of Doble Engineering Company ~~(Doble),~~and related subsidiaries including Morgan Schaffer ~~Inc. (Morgan Schaffer)~~and Altanova (collectively, Doble), and NRG Systems, Inc. (NRG). Doble ~~provides high-end, intelligent~~is an industry leader in the development, manufacture and delivery of diagnostic ~~test~~testing and data management solutions ~~for the~~that enable electric power ~~delivery industry and is a leading supplier of partial discharge testing instruments used~~grid operators to assess the integrity of high voltage power delivery equipment. ~~Morgan Schaffer~~It combines three core elements for customers – diagnostic test and condition monitoring instruments, expert consulting, and testing services – and provides ~~an integrated offering~~access to its large reserve of ~~dissolved gas analysis, oil testing,~~related empirical knowledge. NRG is a global market leader in the design and ~~data management solutions for the electric power industry. NRG designs and manufactures~~manufacture of decision support tools for the renewable energy industry, primarily ~~wind.~~ wind and solar.

The ~~Technical Packaging~~Test segment’s operations consist primarily of ~~Thermoform Engineered Quality LLC (TEQ)~~ETS-Lindgren Inc. and ~~Plastique Limited~~related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in designing and ~~Plastique Sp. z o.o. (together, Plastique). The companies within this segment provide innovative solutions~~manufacturing products and systems to measure and control RF and acoustic energy. It serves the acoustics, medical, health and ~~commercial~~safety, electronics, wireless communications, automotive and defense markets, ~~for thermoformed packages~~supplying a broad range of turnkey systems, including RF test facilities and ~~specialty products using~~measurement systems, acoustic test enclosures, 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 provides a ~~wide~~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 ~~thin gauge plastics~~tests and ~~pulp.~~measurements, and offers a variety of services including calibration and product tests.

Management evaluates and measures the performance of its reportable segments based on “Net Sales” and “EBIT”, which are detailed in the table below. EBIT is defined as earnings before interest and taxes.


							Three Months
							Ended December 31,
(In thousands)	Three Months Ended December 31,						2023		2022
	2017			2016
NET SALES
Filtration	$	60,035			58,785
Aerospace & Defense							$	94,733	82,983
USG								82,984	71,045
Test		37,530			33,827			40,597	51,473
Consolidated totals							$	218,314	205,501

EBIT
Aerospace & Defense							$	16,663	12,536
USG		55,754			35,556			17,625	16,131
Technical Packaging		20,176			18,200
Consolidated totals	$	173,495			146,368

EBIT
Filtration	$	9,645			10,726
Test		2,596			2,425			1,779	5,411
USG		10,651			9,674
Technical Packaging		965			1,031
Corporate (loss)		(8,871	)		(7,047	)		(13,946)	(13,521)
Consolidated EBIT		14,986			16,809			22,121	20,557
Less: Interest expense, net		(2,185	)		(684	)
Less: Interest expense								(2,667)	(1,658)
Earnings before income taxes	$	12,801			16,125		$	19,454	18,899

Non-GAAP Financial Measures

The financial measure “EBIT” is presented in the above table 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 ~~GAAP~~ 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.

8. DEBT

The Company’s debt is summarized as follows:


							December 31,		September 30,
(In thousands)	December 31, 2017			September 30, 2017			2023		2023
Total borrowings	$	260,000			275,000		$	172,000	102,000
Short-term borrowings and current portion of long-term debt		(20,000	)		(20,000	)
Current portion of long-term debt								(20,000)	(20,000)
Total long-term debt, less current portion	$	240,000			255,000		$	152,000	82,000

~~The Company’s existing credit facility (“the Credit Facility”) matures December 21, 2020.~~ The Credit Facility includes a ~~$450~~$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 ~~nine~~seven banks led by ~~JPMorgan~~JP Morgan Chase Bank, N.A., as ~~Administrative Agent.~~

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.

At December 31, ~~2017,~~2023, the Company had approximately ~~$181~~$322 million available to borrow under the Credit Facility, ~~and a~~plus the $250 million increase option subject to the lenders’ consent, in addition to ~~$41.6~~$51.4 million cash on hand. ~~At December 31, 2017, the Company had $260 million of outstanding borrowings under the Credit Facility in addition to outstanding letters of credit of $9.0 million.~~ The Company classified ~~$20.0~~$20 million as the current portion of long-term debt as of December 31, ~~2017,~~2023, as the Company intends to repay this amount within the next twelve ~~month period;~~months; however, the Company ~~has~~ no contractual obligation to repay such amount during the next twelve ~~month period.~~months. The letters of credit issued and outstanding under the Credit Facility totaled $5.8 million at December 31, 2023.

Interest on borrowings under the Credit Facility is calculated at a spread 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 ~~as determined by certain financial ratios,~~ a facility fee ranging from 12.5 to ~~27.5~~25 basis points per ~~year~~annum on the unused portion. The ~~terms of~~interest rate spreads and the facility ~~provide that interest on borrowings may be calculated at a spread over the London Interbank Offered Rate (LIBOR)~~fee are subject to increase or ~~based~~decrease depending on the ~~prime rate, at the~~ Company’s election. The facility is secured by the unlimited guaranty of the Company’s material domestic subsidiaries and a 65% pledge of the material foreign subsidiaries’ share equity. The financial covenants of the Credit Facility include a leverage ~~ratio and an interest coverage~~ ratio. The weighted average interest rates were ~~2.74%~~6.8% and ~~1.61%~~4.6% for the three-month periods ending December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. AtAs of December 31, ~~2017,~~2023, the Company was in compliance with all ~~debt~~ covenants.

8.	~~INCOME TAX EXPENSE~~

9. INCOME TAX EXPENSE

~~Income~~The first quarter 2024 effective income tax ~~benefit~~rate was 22.0% compared to 22.1% in the first quarter of ~~2018 was $21.9 million compared to income tax expense of $5.4 million~~2023. There were no significant changes in the ~~first quarter of 2017. The first quarter 2018~~ effective income tax rate ~~was (170.8%) compared to 33.5% in~~between the ~~first quarter of 2017. H.R. 1,~~~~Tax Cuts and Jobs Act~~ (“TCJA”), was signed into law on December 22, 2017. The total impact of the TCJA in the first quarter of 2018 was a net benefit of $25.1 million. The impacts were as follows: First, the Company’s 2018 federal statutory rate dropped from 35.0% to 24.5% which requires an adjustment to the value of its deferred tax assets and liabilities since the first quarter of 2018 is the period that includes the enactment date. This adjustment ($30.3 million provisional amount) favorably impacted the first quarter effective tax rate by 236.8%. Second, the TCJA subjects the Company’s cumulative foreign earnings to federal income tax ($2.9 million provisional amount) which unfavorably impacted the first quarter effective tax rate by 22.8%. The Company also recorded a $2.3 million provisional estimate of the income tax effects of the future repatriation of the cumulative earnings of its foreign subsidiaries which unfavorably impacted the first quarter effective tax rate by 18.3%.periods.

Staff Accounting Bulletin No. 118 (SAB 118) was issued by the SEC effective December 22, 2017. SAB 118 allows registrants to record provisional amounts of the income tax effects of the TCJA where the information necessary to complete the accounting under ASC Topic 740 is not available but the amounts are based on reasonable estimates. SAB 118 permits registrants to record adjustments to its provisional amounts during the measurement period (which cannot exceed one year).

The Company was able to determine reasonable estimates of the TCJA income tax effects. However, the Company was unable to complete the accounting under ASC Topic 740 for the change in the value of the Company’s deferred tax assets and liabilities as it needs more time to collect and analyze information primarily related to depreciation expense, pension liability, and percentage of completion revenue recognition. The Company was also unable to complete the accounting under ASC Topic 740 for the income tax effects of subjecting the Company’s cumulative foreign earnings to federal income tax as it needs more time to collect and analyze information to compute the cumulative balance of earnings subject to the tax and the amount of foreign tax credit that is available to offset the tax.

Since the TCJA subjected the Company’s cumulative foreign earnings to U.S. tax, repatriation of those earnings generally provides that no additional federal tax will be imposed. However, the permissible amount of repatriation can be restricted by local law and a repatriation can result in tax expense due to local country withholding tax, U.S. state tax, and changes in foreign exchange rates. The Company is evaluating these considerations to determine the amount of its foreign subsidiaries’ cumulative earnings it intends to indefinitely reinvest.

The TCJA includes a tax on global intangible low-taxed income (“GILTI”). The Company expects it will be subject to this tax. At its January 10, 2018 meeting, the FASB staff indicated that companies should make and disclose a policy election as to whether they will recognize deferred taxes for basis differences expected to reverse as GILTI or whether they will account for GILTI as period costs if and when incurred. Because there are interpretative questions associated with the approach that involves recognizing deferred taxes, the Company will undertake an evaluation of these questions and make the accounting policy election during the SAB 118 measurement period.

9.	10. SHAREHOLDERS’ EQUITY

The change in shareholders’ equity for the first three months ~~of 2018~~ended December 31, 2023 and 2022 is shown below (in thousands):

Balance at September 30, 2017 $ 671,918
Net earnings 34,671
Other comprehensive income 1,305
Cash dividends (2,067 )
Stock compensation plans 1,242
Balance at December 31, 2017 $ 707,069


	Three Months Ended December 31,
	2023		2022
Common stock
Beginning balance	$	308	307
Stock plans		—	—
Ending balance		308	307

Additional paid-in-capital
Beginning balance		304,850	301,553
Stock plans		433	(856)
Ending balance		305,283	300,697

Retained earnings
Beginning balance		989,315	905,022
Net earnings common stockholders		15,169	14,727
Dividends paid		(2,064)	(2,067)
Ending balance		1,002,420	917,682

Accumulated other comprehensive income (loss)
Beginning balance		(23,969)	(31,764)
Foreign currency translation		9,414	11,513
Ending balance		(14,555)	(20,251)

Treasury stock
Beginning balance		(139,362)	(126,961)
Share repurchases		—	(5,076)
Ending balance		(139,362)	(132,037)

Total equity	$	1,154,094	1,066,398

~~10.~~

~~RETIREMENT PLANS~~

A summary of net periodic benefit expense for the Company’s defined benefit plans for the three-month periods ended December 31, 2017 and 2016 is shown in the following table. Net periodic benefit cost for each period presented is comprised of the following:

Three Months
Ended December 31,
(In thousands) 2017 2016
Defined benefit plans
Interest cost $ 820 965
Expected return on assets (975 ) (1,094 )
Amortization of:
Prior service cost - 3
Actuarial loss 549 505
Net periodic benefit cost $ 394 379

~~11.~~

~~DERIVATIVE FINANCIAL INSTRUMENTS~~

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. During 2016, the Company entered into several forward contracts to purchase pounds sterling (GBP) to hedge two deferred payments due in connection with the acquisition of Plastique. During the first quarter of 2018, the Company entered into three interest rate swaps with a notional amount of $150 million to hedge some of its exposure to variability in future LIBOR-based interest payments on variable rate debt. In addition, 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. The Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. All derivative instruments are reported in either accrued expenses or other receivables on the balance sheet at fair value. For derivative instruments designated as cash flow hedges, the gain or loss on the derivative is deferred in accumulated other comprehensive income until recognized in earnings with the underlying hedged item. The interest rate swaps entered into during the first quarter of 2018 were not designated as cash flow hedges and, therefore, the gain or loss on the derivative is reflected in earnings each period.

The following is a summary of the notional transaction amounts and fair values for the Company’s outstanding derivative financial instruments by risk category and instrument type as of December 31, 2017:

(In thousands) Notional
amount Fair
Value
(US$) Float
Rate Fix
Rate
Forward contracts 1,859 GBP (156 )
Forward contracts 5,250 USD 33
Forward contracts 200 EUR (10 )
Interest rate swap 150,000 USD (80 ) 1.51 % 1.80 %
Interest rate swap * 150,000 USD 28 N/A 2.09 %
Interest rate swap ** 150,000 USD (20 ) N/A 2.24 %

*This swap represents a forward contract and will be effective in November 2018.

**This swap represents a forward contract and will be effective in November 2019.

~~12.~~

11. 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 December 31, ~~2017~~2023 and September 30, ~~2017~~2023 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables, ~~debt~~ 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, ~~as presented below as of December 31, 2017:~~and are immaterial.

(In thousands) Level 1 Level 2 Level 3 Total
Liabilities:
Forward contracts and swaps $ - (205 ) $ - (205 )

~~Valuation was based on third party evidence of similarly priced derivative instruments.~~

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-month period ended December 31, ~~2017.~~2023.

~~13.~~

~~NEW ACCOUNTING STANDARDS~~

12. REVENUES

Disaggregation of Revenues

Revenues by customer type, geographic location, and revenue recognition method for the three-month period ended December 31, 2023 are presented in the table below as the Company deems it best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The table below also includes a reconciliation of the disaggregated revenue within each reportable segment.


	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	37,209	$	81,469	$	35,087	$	153,765
Government		57,524		1,515		5,510		64,549
Total revenues	$	94,733	$	82,984	$	40,597	$	218,314

Geographic location:
United States	$	79,901	$	55,961	$	22,252	$	158,114
International		14,832		27,023		18,345		60,200
Total revenues	$	94,733	$	82,984	$	40,597	$	218,314

Revenue recognition method:
Point in time	$	39,465	$	66,703	$	7,980	$	114,148
Over time		55,268		16,281		32,617		104,166
Total revenues	$	94,733	$	82,984	$	40,597	$	218,314

Revenues by customer type, geographic location, and revenue recognition method for the three-month period ended December 31, 2022 are presented in the table below:


	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	36,740	$	70,162	$	45,992	$	152,894
Government		46,243		883		5,481		52,607
Total revenues	$	82,983	$	71,045	$	51,473	$	205,501

Geographic location:
United States	$	68,934	$	46,379	$	27,503	$	142,816
International		14,049		24,666		23,970		62,685
Total revenues	$	82,983	$	71,045	$	51,473	$	205,501

Revenue recognition method:
Point in time	$	33,604	$	56,031	$	9,101	$	98,736
Over time		49,379		15,014		42,372		106,765
Total revenues	$	82,983	$	71,045	$	51,473	$	205,501

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 Performance Obligations

Remaining performance obligations, which is the equivalent of 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 December 31, 2023, the Company had $847.8 million in remaining performance obligations of which the Company expects to recognize revenues of approximately 66% 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 December 31, 2023, contract assets, contract liabilities and accounts receivable totaled $138.4 million, $131.9 million and $194.4 million, respectively. During the first quarter of 2024, the Company recognized approximately $24.4 million in revenues that were included in the contract liabilities balance at September 30, 2023. At September 30, 2023, contract assets, contract liabilities and accounts receivable totaled $138.6 million, $123.1 million and $198.6 million, respectively.

13. 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 ~~March 2017,~~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 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
	December 31,		December 31,
(Dollars in thousands)	2023		2022
Finance lease cost
Amortization of right-of-use assets	$	393		393
Interest on lease liabilities		223		236
Operating lease cost		1,864		1,645
Total lease costs	$	2,480		2,274

Additional information related to leases are shown below:


	Three Months Ended			Three Months Ended
	December 31,			December 31,
(Dollars in thousands)	2023			2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,819			1,601
Operating cash flows from finance leases		223			236
Financing cash flows from finance leases		355			327
Right-of-use assets obtained in exchange for lease liabilities
Operating leases	$	—			13,964
Weighted-average remaining lease term
Operating leases		11.1	years		11.6	years
Finance leases		11.1	years		11.7	years
Weighted-average discount rate
Operating leases		4.5	%		4.4	%
Finance leases		4.7	%		4.6	%

The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on the Consolidated Balance Sheet on December 31, 2023:


(Dollars in thousands)	Operating		Finance
Years Ending September 30:	Leases		Leases
2024 (excluding the three months ended December 31, 2023)	$	5,044	1,634
2025		5,684	2,233
2026		4,472	2,297
2027		4,265	2,356
2028 and thereafter		32,991	16,470
Total minimum lease payments		52,456	24,990
Less: amounts representing interest		11,869	6,010
Present value of net minimum lease payments	$	40,587	18,980
Less: current portion of lease obligations		4,878	1,348
Non-current portion of lease obligations	$	35,709	17,632

ROU assets	$	38,685	14,799

Operating lease liabilities are included on the 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.

14. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued ASU ~~2017-07,~~2023-07, “~~Improving the Presentation of Net Periodic Pension Cost~~Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands annual and ~~Net Periodic Postretirement Benefit Cost,~~ ~~which updates ASC 715,~~~~Compensation – Retirement Benefits~~. This update permits only the service cost component of net periodic pension and postretirement expense to be reported with other compensation costs, while all other components are required to be reported separately in other deductions, outside any subtotal of operating income. These updatesinterim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant expenses. The new segment disclosures are effective for fiscal years beginning after December 15, ~~2017, with early adoption permitted,~~2023, and ~~must be adopted on~~interim periods within fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures necessary in the coming quarters, prior to implementation in our fiscal year 2025. Other than additional disclosure, we do not expect a ~~retrospective basis. The updates~~ change ~~presentation only and will not impact the Company’s results~~to our consolidated statements of ~~operations.~~

operations, financial position, or cash flows.

In ~~August 2017,~~December 2023, the FASB issued ASU ~~2017-12,~~2023-09, “~~Targeted~~Income Taxes (Topic 740): Improvements to ~~Accounting for Hedge Activities,~~Income Tax Disclosures,” which provides qualitative and quantitative updates ~~ASC 815,~~~~Derivatives~~to the rate reconciliation and ~~Hedging~~.income taxes paid disclosures. This update is intended to amend the hedge accounting model to enable entities to better align the economics of risk management activities and financial reporting. The updates eliminate the requirement to separately measure and report hedge ineffectiveness and simplify hedge documentation and effectiveness assessment requirements. These updates areASU will be effective for fiscal years beginning after December 15, ~~2018, with early adoption permitted, and must be adopted using a modified retrospective approach. These updates are not expected to materially impact~~2024. Management will review the ~~Company’s results~~extent of ~~operations.~~

~~In February 2016, the FASB issued ASU No. 2016-062,~~~~Leases (Topic 842)~~, which, among other things, requires an entity to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. This standard will increase an entities’ reported assets and liabilities. The standard is effective for fiscal years beginning after December 15, 2018 and mandates a modified retrospective transition period for all entities. The Company is currently assessing the impact of this standard on its consolidated financial statements and related disclosures.

~~In May 2014, the FASB issued ASU No. 2014-09,~~~~Revenue from Contracts with Customers~~, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance has been further clarified and amended. The new standard will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currentlydisclosures necessary in the ~~process~~coming quarters, prior to implementation in our fiscal year 2026. Other than additional disclosure, we do not expect a change to our consolidated statements of ~~evaluating the effect that ASU 2014-09 will have on its consolidated~~operations, financial ~~statements and related disclosures. The Company has selected the Cumulative Effect method of transition to the new standard.~~position, or cash flows.

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

RESULTS OF OPERATIONS

References to the first quarters of ~~2018~~2024 and ~~2017~~2023 represent the three-month periods ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

OVERVIEW

~~In the first quarter of 2018, sales,~~Sales, net earnings and diluted earnings per share were ~~$173.5~~$218.3 million, ~~$34.7~~$15.2 million and ~~$1.33 per share, respectively, compared to $146.4 million, $10.7 million and $0.41~~$0.59 per share, respectively, in the first quarter of ~~2017. The increase in net earnings~~2024 compared to $205.5 million, $14.7 million and ~~diluted earnings~~$0.57 per share, respectively, in the first quarter of ~~2018 as compared to the first quarter of 2017 was mainly due to the $25.1 million net tax benefit the Company recorded as a result of the~~~~Tax Cuts and Jobs Act~~ ~~that was signed into law on December 22, 2017.~~

2023.

NET SALES

Net sales increased ~~$27.1~~$12.8 million, or ~~18.5%~~6.2%, to ~~$173.5~~$218.3 million in the first quarter of ~~2018~~2024 from ~~$146.4~~$205.5 million in the first quarter of ~~2017.~~2023. The increase in net sales in the first quarter of ~~2018~~2024 as compared to the first quarter of ~~2017~~2023 was due to a ~~$20.2~~$12.0 million increase in the USG segment, ~~a $3.7~~and an $11.7 million increase in the ~~Test~~Aerospace & Defense segment, partially offset by a ~~$2.0~~$10.9 million ~~increase~~decrease in the ~~Technical Packaging segment and a $1.2 million increase in the Filtration~~Test segment.

-~~Filtration~~Aerospace & Defense (A&D)

~~In the first quarter of 2018, net~~Net sales of ~~$60.0 million were $1.2 million, or 2.1%, higher than net sales of $58.8~~$94.7 million in the first quarter of ~~2017.~~2024 were $11.7 million, or 14.1%, higher than the $83.0 million in the first quarter of 2023. The sales increase in the first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was ~~mainly~~primarily due to ~~the $5.7~~an approximately $7.0 million ~~sales contributions from the Company’s acquisition of~~increase in aerospace shipments at Mayday, Crissair and PTI, and a ~~$2.2~~$4.7 million increase in net sales at ~~VACCO due to higher shipments of its space products, partially offset~~Globe driven mainly by a $3.9 million decrease in sales at Westland due to timing of orders, a $2.2 million decrease in sales at PTI due to lower aerospace assembly and industrial/automotive shipments and a $0.6 million decrease in sales at Crissair due to lower aerospace shipments.the CMT acquisition.

-~~-Test~~USG

~~In the first quarter of 2018, net~~Net sales of ~~$37.5~~$83.0 million ~~were $3.7 million, or 10.9%, higher than the $33.8 million recorded~~ in the first quarter of ~~2017.~~2024 were $12.0 million, or 16.9% higher than the $71.0 million in the first quarter of 2023. The increase in the first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was mainly due to a $7.6 million increase in net sales at Doble driven by higher sales of offline testing products and services and a $4.4 million increase in net sales at NRG driven by continued strength in the renewables end-market.

-Test

Net sales of $40.6 million in the first quarter of 2024 were $10.9 million, or 21.2%, lower than the $51.5 million in the first quarter of 2023. The decrease in the first quarter of 2024 compared to the first quarter of 2023 was primarily due to ~~higher~~$7.5 million of lower sales from the segment’s ~~U.S.~~U.S operations and $3.4 million of lower sales from the segment’s Asian and European operations, all due to the timing of test and measurement chamber projects.

ORDERS AND BACKLOG

-~~Utility Solutions Group (USG)~~

~~Net sales increased $20.2~~Backlog was $847.8 million ~~or 56.8%, to $55.8~~at December 31, 2023 compared with $772.4 million at September 30, 2023. The Company received new orders totaling $293.7 million in the first quarter of ~~2018 from $35.6~~2024 compared to $228.9 million in the first quarter of 2017. The increase in the first quarter of 2018 compared to the first quarter of 2017 was mainly driven by the $19 million sales contribution from the NRG, Morgan Schaffer and Vanguard acquisitions and new products and software solutions at Doble.

~~-Technical Packaging~~

In the first quarter of 2018, net sales of $20.2 million were $2.0 million, or 10.9% higher than the $18.2 million recorded in the first quarter of 2017. The increase in the first quarter of 2018 compared to the first quarter of 2017 was mainly due to a $1.1 million increase in net sales at TEQ due to higher shipments to medical customers and a $0.9 million increase in net sales at Plastique.

~~ORDERS AND BACKLOG~~

Backlog was $404.1 million at December 31, 2017 compared with $377.1 million at September 30, 2017. The Company received new orders totaling $200.5 million in the first quarter of 2018 compared to $182.9 million in the first quarter of 2017.2023. Of the new orders received in the first quarter of ~~2018, $65.4~~2024, $171.5 million related to ~~Filtration~~Aerospace & Defense products, ~~$58.3 million related to Test products, $57.6~~$77.0 million related to USG products, and ~~$19.2~~$45.2 million related to ~~Technical Packaging~~Test products. Of the new orders received in the first quarter of ~~2017, $67.5~~2023, $97.3 million related to ~~Filtration~~Aerospace & Defense products, ~~$56.0 million related to Test products, $39.5~~$80.2 million related to USG products, and ~~$19.9~~$51.4 million related to ~~Technical Packaging products~~

Test products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative (SG&A) expenses ~~for the first quarter of 2018~~ were ~~$42.2~~$54.0 million ~~(24.3% of net sales), compared with $33.8 million (23.1%~~(24.7% of net sales) for the first quarter of ~~2017.~~2024, compared with $51.3 million (25.0% of net sales) for the first quarter of 2023. The increase in SG&A ~~expenses~~ in the first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was mainly due to an increase inwithin the USG and ~~Filtration~~A&D segments due to ~~the Company’s recent acquisitions,~~higher sales, inflationary impacts and ~~additional sales and marketing expenses at Doble to support future revenue growth.~~

acquisition impacts.

AMORTIZATION OF INTANGIBLE ASSETS

Amortization of intangible assets was ~~$4.4~~$7.9 million and ~~$3.6~~$6.9 million for the first ~~quarters~~quarter of ~~2018~~2024 and ~~2017,~~2023, respectively. 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 first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was mainly due to an increase in amortization of ~~intangibles~~capitalized software and amortization of intangible assets related to the ~~Morgan Schaffer, NRG,~~MPE and ~~Mayday~~CMT acquisitions.

OTHER EXPENSES, ~~(INCOME),~~ NET

Other expenses, net, were $0.2 million in the first quarter of ~~2018~~2024 compared to ~~other income, net, of $0.8~~$0.4 million in the first quarter of ~~2017.~~2023. There were no individually significant items in other expenses, net, in the first quarter of ~~2018.~~2024. The principal component of other ~~income,~~expenses, net, in the first quarter of ~~2017 was $0.4~~2023 included approximately $0.2 million of ~~income related to death benefit insurance proceeds from a former subsidiary.~~

restructuring charges within the A&D segment.

EBIT

The Company evaluates the performance of its operating segments based on EBIT, and provides EBIT on a consolidated basis, which is a non-GAAP financial measure. Please refer to the discussion of non-GAAP financial measures in Note 67 to the Consolidated Financial Statements, above. EBIT was ~~$15.0~~$22.1 million ~~(8.6%~~(10.1% of net sales) for the first quarter of ~~2018~~2024 compared to ~~$16.8~~$20.6 million ~~(11.5%~~(10.0% of net sales) for the first quarter of ~~2017.~~

2023.

The following table presents a reconciliation of EBIT to ~~net earnings.~~a GAAP financial measure:


							Three Months Ended
							December 31,
(In thousands)	Three Months Ended December 31,						2023		2022
	2017			2016
Net earnings							$	15,169		14,727
Plus: Interest expense, net								2,667		1,658
Plus: Income tax expense								4,285		4,172
Consolidated EBIT	$	14,986			16,809		$	22,121		20,557
Less: Interest expense, net		(2,185	)		(684	)
Plus (Less): Income tax		21,870			(5,398	)
Net earnings	$	34,671			10,727

-–~~Filtration~~

Aerospace & Defense

EBIT ~~in the first quarter of 2018~~ was ~~$9.6~~$16.7 million ~~(16.1% of net sales) compared to $10.7 million (18.2%~~(17.6% of net sales) in the first quarter of ~~2017. The decrease in EBIT dollars and as a percent of net sales in the first quarter of 2018~~2024 compared to the first quarter of 2017 was mainly due to lower sales volumes at Westland, PTI and Crissair, partially offset by an increase in EBIT at Mayday and VACCO due to increased sales volumes at these subsidiaries.

-~~Test~~

~~EBIT in the first quarter of 2018 was $2.6~~$12.5 million ~~(6.9% of net sales) compared to $2.4 million (7.2%~~(15.1% of net sales) in the first quarter of ~~2017. EBIT increased in the first quarter of 2018 compared to the first quarter of 2017 primarily due to increased sales volumes.~~

-~~Utility Solutions Group~~

~~EBIT in the first quarter of 2018 was $10.7 million (19.1% of net sales) compared to $9.7 million (27.1% of net sales) in the first quarter of 2017.~~2023. The increase in EBIT in the first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was mainly due to higher sales volumes as well as the EBIT contribution from NRG (May 8, 2017 acquisition), Morgan Schaffer (May 25, 2017 acquisition) and Vanguard (August 30, 2017 acquisition). The decrease in EBIT as a percent of net sales in the first quarter of 2018 compared to the first quarter of 2017 was primarily due to the change in product mix as a result of the recent acquisitions of NRG, Morgan Schaffer and Vanguard.at Mayday, Crissair & Globe mentioned above.

-~~-Technical Packaging~~USG

EBIT ~~in the first quarter of 2018~~ was ~~$1.0~~$17.6 million ~~(4.8% of net sales) compared to $1.0 million (5.7%~~(21.2% of net sales) in the first quarter of ~~2017. The decrease in EBIT as a percent~~2024 compared to $16.1 million (22.7% of net ~~sales~~sales) in the first quarter of ~~2018~~2023. The increase in EBIT in the first quarter of 2024 compared to the first quarter of ~~2017~~2023 was mainly due to ~~product mix~~the higher sales volumes at ~~Plastique.~~

both Doble and NRG in the first quarter of 2024.

-~~Corporate~~Test

EBIT was $1.8 million (4.4% of net sales) in the first quarter of 2024 compared to $5.4 million (10.5% of net sales) in the first quarter of 2023. The decrease in EBIT in the first quarter of 2024 compared to the first quarter of 2023 was primarily driven by the lower sales volumes from the segment’s U.S. and Asian operations. In addition, EBIT in the first quarter of 2024 was negatively impacted by $0.3 million of inventory step-up charges related to the MPE acquisition.

–Corporate

Corporate costs included in EBIT were ~~$8.9~~$13.9 million and ~~$7.0~~$13.5 million in the first quarter of ~~2018~~2024 and ~~2017,~~2023, respectively. The increase in Corporate costs in the first quarter of ~~2018~~2024 compared to the first quarter of ~~2017~~2023 was ~~primarily~~mainly due to ~~higher professional fees and~~ an increase in ~~amortization of intangible assets~~share based compensation costs and costs related to ~~recent acquisitions.~~

the MPE acquisition.

INTEREST EXPENSE, NET

Interest expense ~~net~~ was ~~$2.2~~$2.7 million and ~~$0.7~~$1.7 million in the first quarter of ~~2018~~2024 and ~~2017,~~2023, respectively. The increase in interest expense in the first quarter of ~~2018~~2024 as compared to the first quarter of ~~2017~~2023 was mainly due to higher average ~~outstanding borrowings ($265.7 million compared to $160.3 million) and higher average~~ interest rates ~~(2.7% vs. 1.6%) as a result of the additional borrowings to fund the Company’s 2017 acquisitions.~~

~~INCOME TAX EXPENSE~~

~~Income tax benefit~~(6.8% in the first quarter of ~~2018 was $21.9 million~~2024 compared to ~~income tax expense of $5.4 million~~4.6% in the first quarter of ~~2017.~~ 2023) and higher average outstanding borrowings.

INCOME TAX EXPENSE

The ~~first quarter 2018~~ effective income tax rate was ~~(170.8%) compared to 33.5%~~22.0% in the first quarter of ~~2017. H.R. 1,~~~~Tax Cuts and Jobs Act~~ ~~(“TCJA”), was signed into law on December 22, 2017. The total impact of the TCJA~~2024 compared to 22.1% in the first quarter of 2018 was a net benefit of $25.1 million. The impacts were as follows: First, the Company’s 2018 federal statutory rate dropped from 35.0% to 24.5% which requires an adjustment to the value of its deferred tax assets and liabilities since the first quarter of 2018 is the period that includes the enactment date. This adjustment ($30.3 million provisional amount) favorably impacted the first quarter effective tax rate by 236.8%. Second, the TCJA subjects the Company’s cumulative foreign earnings to federal income tax ($2.9 million provisional amount) which unfavorably impacted the first quarter effective tax rate by 22.8%. The Company also recorded a $2.3 million provisional estimate of the income tax effects of the future repatriation of the cumulative earnings of its foreign subsidiaries which unfavorably impacted the first quarter effective tax rate by 18.3%.

~~During the three-month period ended December 31, 2017, there~~2023. There were no ~~material~~significant changes in the ~~unrecognized~~effective income tax ~~benefits. The Company does not anticipate a material change in~~rate between the ~~amount of unrecognized tax benefits in the next twelve months.~~

TCJA moved the U.S. to a federal tax system that will no longer tax dividends from foreign corporations to U.S. corporations. The cost of transitioning to this new tax system is a deemed repatriation of cumulative foreign earnings, the “Foreign Earnings Toll Charge”, the estimated tax cost of which was recorded in the first quarter of 2018. The actual repatriation of foreign earnings triggers foreign dividend withholding taxes and U.S. state taxes, the estimated cost of which was recorded in the first quarter of 2018.

periods.

CAPITAL RESOURCES AND LIQUIDITY

The Company’s overall financial position and liquidity ~~remains~~remain strong. Working capital (current assets less current liabilities) ~~decreased~~increased to ~~$195.0~~$298.5 million at December 31, ~~2017~~2023 from ~~$197.8~~$266.4 million at September 30, 2017. Accounts receivable decreased $12.1 million primarily related to an $11.9 million decrease within the Filtration segment due to timing of collections and lower sales volumes in the first quarter of 2018 compared to the fourth quarter of 2017.2023. Inventories increased ~~by $6.1~~$18.5 million during this period mainly due to a ~~$3.3~~$9.1 million increase within the ~~Filtration~~Aerospace & Defense segment, a $7.5 million increase within the USG segment and a $1.9 million increase within the Test segment primarily from an increase in work in process inventories due to ~~support new aerospace platforms.~~

timing of manufacturing existing orders. Accrued salaries decreased by $9.9 million during this period due to timing of salaries and bonus payments.

Net cash provided by operating activities was ~~$17.8~~$8.7 million and ~~$15.7~~net cash used by operating activities was $(9.0) million in the first quarters of 2024 and 2023, respectively. The increase in net cash provided by operating activities in the first quarter of ~~2018~~2024 as compared to the first quarter of 2023 was mainly driven by an increase in contract liabilities and ~~2017, respectively.~~

lower accounts receivable balances due to timing of collections.

Capital expenditures were ~~$3.6~~$7.8 million and ~~$7.0~~$4.8 million in the first quarters of 2024 and 2023, respectively. The increase in the first quarter of ~~2018 and 2017, respectively. The decrease in the first quarter of 2018~~2024 was mainly due to an increase in building improvements and machinery ~~and~~& equipment ~~additions at VACCO ($1.7 million) and Plastique ($1.3 million) during~~within the ~~first quarter of 2017.~~A&D segment. In addition, the Company incurred expenditures for capitalized software of ~~$2.1~~approximately $2.9 million and ~~$1.4~~$2.8 million in the first ~~quarter~~quarters of ~~2018~~2024 and ~~2017,~~2023, respectively.

Acquisition

Credit Facility

At December 31, ~~2017,~~2023, the Company had approximately ~~$181~~$322 million available to borrow under its ~~Credit Facility,~~bank credit facility, a $250 million increase option, and ~~$41.6~~$51.4 million cash on hand. At December 31, ~~2017,~~2023, the Company had ~~$260.0~~$172 million of outstanding borrowings under the ~~Credit Facility~~credit facility in addition to outstanding letters of credit of ~~$9.0~~$5.8 million. Cash flow from operations and borrowings under the Company’s ~~Credit Facility~~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.

~~New Accounting Standards~~

~~In March 2017, the FASB issued ASU 2017-07,~~~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,~~ ~~which updates ASC 715,~~~~Compensation – Retirement Benefits~~. This update permits only the service cost component of net periodic pension and postretirement expense to be reported with other compensation costs, while all other components are required to be reported separately in other deductions, outside any subtotal of operating income. These updates are effective for fiscal years beginning after December 15, 2017, with early adoption permitted, and must be adopted on a retrospective basis. The updates change presentation only and will not impact the Company’s results of operations.

~~In August 2017, the FASB issued ASU 2017-12,~~~~Targeted Improvements to Accounting for Hedge Activities,~~ ~~which updates ASC 815,~~~~Derivatives and Hedging~~. This update is intended to amend the hedge accounting model to enable entities to better align the economics of risk management activities and financial reporting. The updates eliminate the requirement to separately measure and report hedge ineffectiveness and simplify hedge documentation and effectiveness assessment requirements. These updates are effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. These updates are not expected to materially impact the Company’s results of operations.

~~In May 2014, the FASB issued ASU No. 2014-09,~~~~Revenue from Contracts with Customers~~, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance has been further clarified and amended. The new standard will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently in the process of evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has selected the Cumulative Effect method of transition to the new standard.

Dividends

A dividend of $0.08 per share, totaling $2.1 million, was paid on October 17, ~~2017~~2023 to stockholders of record as of October 3, ~~2017. Following the end of the first quarter, the~~2023. Subsequent to December 31, 2023, a quarterly dividend of $0.08 per share, ortotaling $2.1 million, was paid on January 19, ~~2018~~2024 to stockholders of record as of January 4, ~~2018.~~

~~OUTLOOK~~

Management projects 2018 GAAP EPS to be in the range of $3.55 to $3.65 per share and Adjusted EPS to be in the range of $2.65 to $2.75 per share, reflecting the profit contributions from the recent acquisitions, additional depreciation and amortization charges, higher interest costs, the discrete cost reduction charges in USG and Filtration described below and, adjusting for the first quarter 2018 one-time / incremental net tax benefits resulting from U.S. Tax Reform and the cost reduction charges described below. Management expects the 2018 second quarter GAAP EPS to be in the range of $0.30 to $0.35 per share (including approximately $2 million to $3 million of pretax charges in the USG and Filtration segments relating to certain cost reduction initiatives) and Adjusted EPS to be in the range of $0.38 to $0.43 per share.

2024.

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.~~Analysis and in Note 1 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

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 ~~amount~~strength of certain end markets served by the Company, and the timing of ~~future sales, revenues, cash flows, Adjusted EPS and EPS;~~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; adjustments to the values of deferred tax assets and liabilities; income taxation of foreign earnings and the future repatriation, reinvestment or distribution of foreign earnings; future income tax liabilities and effective tax rate; timing of the repayment of the current portion of the Company’s long-term debt; ~~changes in~~future revenues from remaining performance obligations; fair values of reporting units; the ~~amount~~deductibility of ~~unrecognized tax benefits;~~goodwill; estimates and assumptions that affect the reported amounts of assets and liabilities; the recognition ~~and timing~~ of ~~costs~~compensation cost related to share-based compensation arrangements; returns on retirement plan assets; estimates or projections made in connection with the Company’s accounting policies; market risks relating to the Company’s operations and changes in interest rates and the Company’s ability to hedge against or otherwise manage ~~them~~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, ~~2017,~~2023, and the following: the impacts of climate change and related regulation of greenhouse gases; the impacts of labor disputes, civil disorder, wars, 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; or 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; ~~financial exposure in connection with Company guarantees of certain Aclara contracts;~~ 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;~~difficulties or data breaches; the availability of ~~select~~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; ~~labor disputes; final analysis of the impacts of the TCJA;~~material changes in ~~U.S. tax laws and regulations; other~~the cost of credit; changes in laws and regulations including but not limited to changes in accounting standards and ~~foreign~~ taxation; changes in interest 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. During 2016, the Company entered into several forward contracts to purchase pounds sterling to hedge two deferred payments due in connection with the acquisition of Plastique. During the first quarter of 2018, the Company entered into three interest rate swaps with a notional amount of $150 million to hedge some of its exposure to variability in future LIBOR-based interest payments on variable rate debt. In addition, theThe 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. ~~The interest rate swaps entered into during the first quarter of 2018 were not designated as cash flow hedges and, therefore, the gain or loss on the derivative is reflected in earnings each period.~~ There has been no material change to the Company’s market risks since September 30, 2017. See Note 12 to the Consolidated Financial Statements in Item 1 of this Report for a summary of the Company’s outstanding derivative financial instruments as of December 31, 2017. Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 for further discussion about market risk.2023.

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. 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. 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 first quarter of 2024.

ITEM 5. OTHER INFORMATION

During the first quarter of fiscal 2024, no director or officer (as defined in Securities and Exchange Commission Rule 16a-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 10b5-1 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

~~3.2~~ 3.1(d)	~~Bylaws~~Amendment of Articles of Incorporation effective February 5, 2018	Exhibit 33.1 to the Company’s Form 8-K filed ~~May~~February 7, ~~2014~~2018

~~4.1~~ 3.2	~~Specimen revised Common Stock Certificate~~Bylaws	Exhibit ~~4.1~~3.1 to the Company’s Form ~~10-Q for the fiscal quarter ended March 31, 2010~~8-K filed November 22, 2022

4.2	Amended and Restated Credit Agreement dated ~~as of December 21, 2015 among~~August 30, 2023	Exhibit 10.1 to the Registrant, the Foreign Subsidiary Borrowers from time to time party thereto, the Lenders from time to time party thereto, JP Morgan Chase Bank, N.A. as Administrative Agent, and Bank of America, N.A., BMO Harris Bank, N.A., SunTrust Bank and Wells Fargo Bank, National Association as Co-Documentation Agents	~~Exhibit 4.1 to~~Company’s Form 8-K ~~dated December 23, 2015~~filed September 6, 2023

~~4.3~~ 10.1	~~Amendment No. 1~~Form of Fiscal 2024 Performance Share Unit Awards to ~~December 21, 2015 Credit Agreement, effective September 30, 2016~~Executive Officers under 2018 Omnibus Incentive Plan	~~Exhibit 4.4 to Form 10-K for the fiscal year ended September 30, 2016~~ Filed herewith

~~4.4~~ 31.1	~~Amendment No. 2 to December 21, 2015 Credit Agreement, effective May 15, 2017~~	~~Exhibit 4.4 to Form 10-Q for the fiscal quarter ended June 30, 2017~~

~~31.1~~	Certification of Chief Executive Officer ~~relating to Form 10-Q for period ended December 31, 2017~~	Filed herewith

31.2	Certification of Chief Financial Officer ~~relating to Form 10-Q for period ended December 31, 2017~~	Filed herewith

32	Certification of Chief Executive Officer and Chief Financial Officer ~~relating to Form 10-Q for period ended December 31, 2017~~	Filed herewith

101.INS	XBRL Instance Document*	Submitted herewith
~~101.SCH~~
101.SCH	XBRL Schema Document*	Submitted herewith
~~101.CAL~~
101.CAL	XBRL Calculation Linkbase Document*	Submitted herewith
~~101.DEF~~
101.DEF	XBRL Definition Linkbase Document*	Submitted herewith
~~101.LAB~~
101.LAB	XBRL Label Linkbase Document*	Submitted herewith
~~101.PRE~~
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/ ~~Gary E. Muenster~~Christopher L. Tucker
	~~Gary E. Muenster~~ Christopher L. Tucker
	~~Executive~~ Senior Vice President and Chief Financial Officer
	(As duly authorized officer and principal accounting and financial officer of the registrant)

Dated: February 9, 2024

~~Dated: February 7, 2018~~

MISSOURI	43-1554045
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

9900A CLAYTON ROAD
ST. LOUIS, MISSOURI	63124-1186
(Address of principal executive offices)	~~(Zip~~ (Zip Code)

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

~~Class~~
Class		Shares outstanding at January 31, ~~2018~~2024
Common stock, $.01 par value per share		~~25,844,866~~ 25,798,271

	Three Months Ended December 31,
	2017			2016

Net sales	$	173,495			146,368
Costs and expenses:
Cost of sales		111,736			92,914
Selling, general and administrative expenses		42,154			33,762
Amortization of intangible assets		4,446			3,649
Interest expense, net		2,185			684
Other expenses (income), net		173			(766	)
Total costs and expenses		160,694			130,243

Earnings before income taxes		12,801			16,125
Income tax (benefit) expense		(21,870	)		5,398
Net earnings	$	34,671			10,727

Earnings per share:
Basic - Net earnings	$	1.34			0.42

Diluted - Net earnings	$	1.33			0.41

x

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, ~~2017~~2023

¨
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ~~______~~ TO ~~______~~

Large accelerated filerx	☒	Accelerated filer¨	☐
Non-accelerated filer¨ ~~(Do not check if a smaller reporting company)~~	☐	Smaller reporting company¨	☐
Emerging growth company¨	☐

(Dollars in millions)	USG		Test		Filtration		Packaging		Total
Balance as of September 30, 2017		250.2		34.1		73.7		19.9		377.9
Acquisition activity – working capital adj		0.2		-		-		-		0.2
Foreign currency translation and other		-		-		-		0.4		0.4
Balance as of December 31, 2017	$	250.4		34.1		73.7		20.3		378.5

Balance at September 30, 2017	$	671,918
Net earnings		34,671
Other comprehensive income		1,305
Cash dividends		(2,067	)
Stock compensation plans		1,242
Balance at December 31, 2017	$	707,069

(In thousands)	Notional amount			Fair Value (US$)			Float Rate			Fix Rate
Forward contracts		1,859	GBP		(156	)
Forward contracts		5,250	USD		33
Forward contracts		200	EUR		(10	)
Interest rate swap		150,000	USD		(80	)		1.51	%		1.80	%
Interest rate swap *		150,000	USD		28			N/A			2.09	%
Interest rate swap **		150,000	USD		(20	)		N/A			2.24	%

(In thousands)	Level 1		Level 2			Level 3		Total
Liabilities:
Forward contracts and swaps	$	-		(205	)	$	-		(205	)