ESCO sold materially more in the first nine months, and kept only a little more cash from it.
Revenue rose 14.4% to $339.0 million for the nine months ended June 30, compared with $296.3 million a year earlier. Net income grew 25.6% to $32.7 million, lifting net margin from 8.8% to 9.7%.
That is the clean part of the report. The less tidy number is operating cash flow: $134.0 million, up just 1.5%. Accounts receivable rose 12.4% to $267.5 million, and cash on hand fell 7.0% to $73.2 million. ESCO does not give a specific reason for the receivables increase.
Management attributes the profit improvement to more volume, pricing, and mix, with Doble doing much of the lifting and NRG going the other way. The company’s disclosure puts the trade-off plainly:
"The increase in EBIT in the third quarter and first nine months of 2026 compared to the corresponding periods of 2025 was mainly driven by leverage on higher sales volumes at Doble and price increases and mix, partially offset by lower sales volumes at NRG, and inflationary pressures."
10-Q 2026-08-10
In plain English, ESCO is getting more earnings from the sales it does make, but the growth is not uniform across the portfolio. Doble added $25.5 million of sales, while NRG declined by $14.3 million.
The margin story also carries a cost. Inflation offset part of the benefit from price increases, while restructuring charges and acquisition costs reached $0.9 million in the first nine months, up from $0.3 million in the comparable period. Test EBIT margin also edged down to 15.4% from 15.9% in the third quarter comparison cited by the company.
Then there is Megger. The pending acquisition added roughly $7 million of debt-financing costs in the latest reported period, even as lower average borrowings and lower interest rates partly reduced the bill:
"The increase in interest expense in the third quarter and first nine months of 2026 compared to the corresponding periods of 2025 was mainly due to approximately $7 million of debt financing costs incurred in the third quarter of 2026 related to the pending Megger acquisition, partially offset by lower average outstanding borrowings due to the prior year Maritime acquisition and lower average interest rates."
10-Q 2026-08-10
That makes the balance sheet part of the operating story, not a footnote. ESCO is funding expansion while receivables are growing almost as quickly as sales, and the acquisition has already put a charge on interest expense before its business contribution appears in these figures.
The company’s own annual results show revenue reached $1.1 billion in fiscal 2025, up 19.2%, while operating margin was 15.6%. The latest nine-month results keep that expansion visible, but the free-cash-flow margin fell 2.8 percentage points from the comparable period.
ESCO’s next quarterly report will provide the next comparison for receivables, operating cash flow, and the financing costs tied to Megger. For now, ESCO has faster profit growth and a slower cash-conversion question.
Source: ESCO Technologies’ Aug. 10, 2026 10-Q. Its latest nine-month results pair faster profit growth with slower cash conversion.