ESCO (ESE) 8-K Reports Record Orders and Backlog

Exhibit 99.1

NEWS FROM   

For more information contact:	For media inquiries:
Kate Lowrey	David P. Garino
Director, Investor Relations	(314) 982-0551
ESCO Technologies Inc.
(314) 213-7277

ESCO ANNOUNCES SECOND QUARTER RESULTS;

REPORTS RECORD ORDERS AND BACKLOG

ST. LOUIS, May 4, 2010 – ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the second quarter ended March 31, 2010.

EPS is presented from “Continuing Operations” and “Discontinued Operations.” Fiscal 2009 discontinued operations include the results of Comtrak which was sold in March 2009.

Second Quarter 2010 Highlights

·   Net sales were $129.3 million ($242.0 million year-to-date);

·   EPS was $0.22 per share ($0.24 per share year-to-date);

·   Entered orders were $218.6 million ($357 million year-to-date), representing record quarterly order volume, and resulting in a book-to-bill ratio of 1.7x; and

·   Backlog increased $89.3 million (27 percent) to an all-time high of $414.4 million.

Chairman’s Commentary

Vic Richey, Chairman and Chief Executive Officer, commented, “I am extremely pleased with our second quarter results, as we beat our profit, cash flow and order projections. With solid execution across all three segments, we exceeded our internal EBIT and EPS targets by more than 10 percent, and surpassed our order goals by nearly 17 percent, with Aclara being the biggest contributor to the upside.

“Following our significant first quarter orders, we realized a 58-percent increase in orders sequentially during the second quarter, resulting in year-to-date orders of $357 million. Clearly, entered orders and the record-high backlog are the highlights of our year-to-date performance. This order momentum was realized across the Company, with all three segments reflecting backlog growth since the start of the fiscal year.

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“At the halfway point, I’m very comfortable with where we are in relation to meeting our full-year operating goals. My confidence in the balance of the fiscal year has been significantly bolstered by the level and mix of our shippable backlog.

“Looking forward, we remain confident in our ongoing business prospects across all segments of our business, both domestically and internationally. Our Aclara products, in particular, are well positioned on several international projects in Central America and South America as well as Asia. We expect these geographic areas to be significant contributors to our multi-year growth outlook.”

Entered Orders

Entered orders in the 2010 second quarter were $218.6 million, resulting in a book-to-bill ratio of 169 percent of sales.

Second Quarter Order Highlights:

·   Aclara RF AMI gas product orders with PG&E were $19.1 million, bringing total PG&E gas project orders to 4.1 million units and $226 million, representing the entire quantity of units expected in the original contract.

·   Aclara RF AMI water orders for the New York City Water project were $22.4 million, bringing total NYC water orders to $57.4 million cumulative to date.

·   Aclara RF AMI water orders with San Francisco Public Utilities were $13 million.

·   Aclara PLS AMI orders were $55.2 million, including $36.7 million from COOPs, $11.0 million from international customers and $7.5 million from IOUs.

·   Test segment orders were $52.2 million, including an order for two large RF shielded enclosures worth over $14 million.

Significant Contracts Signed (Not in Backlog):

·   Aclara RF AMI water contract with Toho Water Authority in Florida, with orders under the contract expected to total $9 million.

·   Aclara RF AMI water contract with the City of Toronto, with orders under the contract expected to total $34 million.

Business Outlook

Statements contained in the preceding and following paragraphs are based on current expectations. Statements that are not strictly historical are considered forward-looking, and actual results may differ materially.

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Dividend Payment

The next quarterly cash dividend of $0.08 per share will be paid on July 20 to stockholders of record on July 6.

FY 2010

Management’s expectations for fiscal year 2010 remain consistent with the Business Outlook discussions noted in the Company’s Earnings Release dated November 12, 2009.

As noted earlier, Management decided to defer providing specific 2010 guidance due to the significant size and uncertain timing of the numerous projects in which the Company is currently engaged. Combined with the impact of the global economic recovery, Management believes the specific financial impact and timing of these large projects will be more quantifiable in the future, and therefore believes it is prudent to defer providing specific EPS guidance at this time.

Chairman’s Commentary – Wrap-Up

Mr. Richey concluded, “We continue to have a sizeable amount of specific, identifiable growth opportunities that we expect to develop into orders and sales over time. I expect the balance of 2010 to reflect significant activity as many of these projects materialize and firmly set us up for meaningful growth in sales and earnings over the next few years. I remain very optimistic about our current business prospects, both domestically and internationally, as well as our new product “roadmap”. Our commitment remains the same − to achieve our long-term goal of increasing shareholder value.”

Conference Call

The Company will host a conference call today, May 4, at 4 p.m. Central Time, to discuss the Company’s second quarter fiscal 2010 operating results. A live audio webcast will be available on the Company’s web site at www.escotechnologies.com. Please access the web site at least 15 minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available for seven days on the Company’s web site noted above or by phone (dial 1-888-203-1112 and enter the pass code 1248444).

Forward-Looking Statements

Statements in this press release regarding the likelihood, timing and size of potential international and domestic opportunities, achievement of fiscal 2010 operating goals, projects and contracts which the Company may receive or participate in, expected total orders to be

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received under significant Company contracts and orders described herein, amounts and timing of fiscal 2010 and beyond revenues, earnings, sales growth, orders, the success in capturing international AMI opportunities, the global economic recovery, success of new products and technologies, the long-term success of the Company, and any other written or oral statements which are not strictly historical are “forward-looking” statements within the meaning of the safe harbor provisions of the federal securities laws. Investors are cautioned that such statements are only predictions and speak only as of the date of this release, and the Company undertakes no duty to update. 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: the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009; the effect of the American Recovery and Reinvestment Act of 2009; the success of the Company’s competitors; changes in Federal or State energy laws; the Company’s successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; unforeseen charges impacting corporate operating expenses; the performance of the Company’s international operations; material changes in the costs and availability of certain raw materials including steel and copper; worldwide availability of electronic components; delivery delays or defaults by customers; termination for convenience of customer contracts; timing and magnitude of future contract awards; containment of engineering and development costs; performance issues with key customers, suppliers and subcontractors; labor disputes; changes in laws and regulations including but not limited to changes in accounting standards and taxation requirements; costs relating to environmental matters; uncertainty of disputes in litigation or arbitration; and the Company’s successful execution of internal operating plans.

ESCO, headquartered in St. Louis, is a proven supplier of special purpose utility solutions for electric, gas, and water utilities, including hardware and software to support advanced metering applications and fully automated intelligent instrumentation. In addition, the Company provides engineered filtration products to the aviation, space, and process markets worldwide and is the industry leader in RF shielding and EMC test products. Further information regarding ESCO and its subsidiaries is available on the Company’s web site at www.escotechnologies.com.

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts)
	Three Months Ended March 31, 2010		Three Months Ended March 31, 2009
Net Sales	$	129,281		154,156
Cost and Expenses:
Cost of sales		79,399		92,226
SG&A		36,809		38,237
Amortization of intangible assets		2,887		4,985
Interest expense		755		1,756
Other expenses (income), net		288		357
Total costs and expenses		120,138		137,561
Earnings before income taxes		9,143		16,595
Income taxes		3,177		5,990
Net earnings from continuing operations		5,966		10,605
Loss from discontinued operations, net of tax    benefit of $101		-		(177	)
Loss on sale from discontinued operations, net    of tax benefit of $905		-		(32	)
Net loss from discontinued operations		-		(209	)
Net earnings	$	5,966		10,396
Earnings per share:
Basic
Continuing operations		0.23		0.41
Discontinued operations		-		(0.01	)
Net earnings	$	0.23		0.40
Diluted
Continuing operations		0.22		0.40
Discontinued operations		-		(0.01	)
Net earnings	$	0.22		0.39
Average common shares O/S:
Basic		26,440		26,177
Diluted		26,702		26,470

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts)
	Six Months Ended March 31, 2010		Six Months Ended March 31, 2009
Net Sales	$	241,986		301,513
Cost and Expenses:
Cost of sales		146,835		184,842
SG&A		76,017		77,519
Amortization of intangible assets		5,771		9,587
Interest expense		2,237		4,374
Other expenses (income), net		1,311		244
Total costs and expenses		232,171		276,566
Earnings before income taxes		9,815		24,947
Income taxes		3,412		8,502
Net earnings from continuing operations		6,403		16,445
Loss from discontinued operations, net of tax    benefit of $112		-		(197	)
Loss on sale from discontinued operations, net    of tax benefit of $905		-		(32	)
Net loss from discontinued operations		-		(229	)
Net earnings	$	6,403		16,216
Earnings per share:
Basic
Continuing operations		0.24		0.63
Discontinued operations		-		(0.01	)
Net earnings	$	0.24		0.62
Diluted
Continuing operations		0.24		0.62
Discontinued operations		-		(0.01	)
Net earnings	$	0.24		0.61
Average common shares O/S:
Basic		26,432		26,143
Diluted		26,705		26,444

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Business Segment Information (Unaudited) (Dollars in thousands)
	Three Months Ended March 31,										Six Months Ended March 31,
	2010					2009					2010					2009
Net Sales
Utility Solutions Group	$	72,009					94,065					133,232					182,266
Test		31,580					33,713					58,567					69,202
Filtration		25,692					26,378					50,187					50,045
Totals	$	129,281					154,156					241,986					301,513
EBIT
Utility Solutions Group	$	10,621					16,138					15,191					26,693
Test		2,096					3,748					2,796					6,982
Filtration		2,989					4,227					5,347					7,090
Corporate		(5,808	)	(1	)		(5,762	)	(2	)		(11,282	)	(3	)		(11,444	)	(4	)
Consolidated EBIT		9,898					18,351					12,052					29,321
Less: Interest expense		(755	)				(1,756	)				(2,237	)				(4,374	)
Earnings before income taxes	$	9,143					16,595					9,815					24,947

Note:Depreciation and amortization expense was $5.6 million and $7.2 million for the quarters ended March 31, 2010 and 2009, respectively, and $11.2 million and $15.1 million for the six-month periods ended March 31, 2010 and 2009, respectively.

(1)Includes $1.2 million of amortization of acquired intangible assets.

(2)Includes $1.2 million of amortization of acquired intangible assets.

(3)Includes $2.3 million of amortization of acquired intangible assets.

(4)Includes $2.4 million of amortization of acquired intangible assets.

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
	March 31, 2010		September 30, 2009
Assets
Cash and cash equivalents	$	22,925		44,630
Accounts receivable, net		94,432		108,620
Costs and estimated earnings on    long-term contracts		6,378		10,758
Inventories		89,302		82,020
Current portion of deferred tax assets		21,594		20,417
Other current assets		20,068		13,750
Total current assets		254,699		280,195
Property, plant and equipment, net		70,422		69,543
Goodwill		330,326		330,719
Intangible assets, net		219,518		221,600
Other assets		21,887		21,630
	$	896,852		923,687
Liabilities and Shareholders’ Equity
Current maturities of long-term debt	$	50,000		50,000
Accounts payable		29,051		47,218
Current portion of deferred revenue		21,645		20,215
Other current liabilities		45,830		46,552
Total current liabilities		146,526		163,985
Deferred tax liabilities		78,326		78,471
Other liabilities		31,505		33,424
Long-term debt		120,363		130,467
Shareholders’ equity		520,132		517,340
	$	896,852		923,687

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
	Six Months Ended March 31, 2010
Cash flows from operating activities:
Net earnings	$	6,403
Adjustments to reconcile net earnings to net cash   provided by operating activities:
Depreciation and amortization		11,157
Stock compensation expense		1,900
Changes in current assets and liabilities		(15,158	)
Effect of deferred taxes		(1,322	)
Pension contributions		(968	)
Other		829
Net cash provided by operating activities		2,841
Cash flows from investing activities:
Additions to capitalized software		(4,095	)
Capital expenditures		(7,074	)
Net cash used by investing activities		(11,169	)
Cash flows from financing activities:
Proceeds from long-term debt		8,000
Principal payments on long-term debt		(18,104	)
Dividends paid		(2,115	)
Proceeds from exercise of stock options		412
Other		655
Net cash used by financing activities		(11,152	)
Effect of exchange rate changes on cash and cash equivalents		(2,225	)
Net decrease in cash and cash equivalents		(21,705	)
Cash and cash equivalents, beginning of period		44,630
Cash and cash equivalents, end of period	$	22,925

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES Other Selected Financial Data (Unaudited) (Dollars in thousands)
Backlog And Entered Orders – Q2 FY 2010	Utility Solutions			Test			Filtration			Total
Beginning Backlog – 12/31/09	$	145,464			64,325			115,295			325,084
Entered Orders		141,005			52,206			25,348			218,559
Sales		(72,009	)		(31,580	)		(25,692	)		(129,281	)
Ending Backlog – 3/31/10	$	214,460			84,951			114,951			414,362
Backlog And Entered Orders – YTD Q2 FY 2010	Utility Solutions			Test			Filtration			Total
Beginning Backlog – 9/30/09	$	132,376			54,240			112,755			299,371
Entered Orders		215,316			89,277			52,384			356,977
Sales		(133,232	)		(58,567	)		(50,187	)		(241,986	)
Ending Backlog – 3/31/10		214,460			84,950			114,952			414,362

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