Exhibit 99.1

NEWS FROM
                     
 
 
 
For more information contact:                                                                                                   For media inquiries:
Patricia K. Moore                                                                                                   David P. Garino
Director, Investor Relations                                                                                                   (314) 982-0551
ESCO Technologies Inc.
(314) 213-7277

ESCO ANNOUNCES FIRST QUARTER RESULTS

ST. LOUIS, February 4, 2010 – ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the first fiscal quarter ended December 31, 2009.
EPS is presented from “Continuing Operations” and “Discontinued Operations”. Fiscal 2009 discontinued operations include the results of Comtrak which was sold in March 2009.
 
First Quarter 2010 Highlights
 
·  
Net sales were $112.7 million;
·  
EPS was $0.02 per share;
·  
Gross margin percentage (sales, less cost of sales, divided into sales) was 40.2 percent;
·  
Cash flow from operating activities was $5.2 million;
·  
Net debt outstanding was $129.6 million at December 31, 2009 (2.0x leverage ratio);
·  
Entered orders were $138.4 million, (book-to-bill ratio of 1.23x); and
·  
Backlog increased $25.7 million (9 percent) to an all-time high of $325.1 million.
 
Chairman’s Commentary
 
Vic Richey, Chairman and Chief Executive Officer, commented, “I am pleased with our first quarter results, as we beat our original profit, cash flow and order expectations. We anticipated net earnings and EPS at break-even, but as a result of solid execution on several fronts, particularly within the Utility Solutions Group and Filtration segments, we exceeded our EBIT goals by nearly $2 million, with Doble being the biggest contributor.
“The most important highlight of the quarter was the strength of entered orders and the resulting record high backlog. Strong order activity was realized across all three operating segments, which reinforces that we are taking the appropriate actions when it comes to investing in new products, enhancing existing products and servicing our customers with innovative solutions.
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“We made meaningful progress toward meeting our annual operating goals by capturing several large water AMI projects, as well as booking $26 million of initial AMI deployment orders with two significant international customers in Latin America. We continue to be enthused with our business prospects in Central and South America, and, as these international projects begin to deploy Aclara products, we expect they will be significant contributors to our multi-year growth outlook.
“While the government’s Stimulus Program continues to cause delays of some expected orders and sales, we remain confident that once the money is distributed to the utilities we will benefit from this program over the balance of the year and well into the future.
“I am confident that given our new products, the strength and size of our domestic and international business prospects and acquisition opportunities, we are well-positioned for the future.”
 
Entered Orders
 
Entered orders in the 2010 first quarter were $138.4 million, resulting in a book-to-bill ratio of 123 percent of sales.
 
First Quarter Order / Contract Highlights:
·  
Aclara RF AMI gas product orders with PG&E were $7.4 million during the first quarter, bringing total PG&E gas project orders to 3.7 million units and $207 million.
·  
Aclara PLS AMI orders were $38.4 million, including approximately $26 million of international business in Mexico and Colombia.
·  
Test segment orders were $37.1 million, including several large chamber orders.
 
Significant Contracts / Orders Received Subsequent to December 31:
·  
Aclara RF AMI water contract signed with San Francisco Public Utilities Commission in November 2009, with a $13 million purchase order received in January 2010.
·  
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 City of Toronto with orders under the contract expected to total $34 million.
·  
Aclara RF AMI water orders for the New York City Water project worth $17.3 million.
·  
Test segment order for two large shielded enclosures worth over $14 million.
 
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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.
 
Dividend Payment
 
The next quarterly cash dividend of $0.08 per share will be paid on April 20 to stockholders of record on April 5.
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 should develop into orders and sales in varying degrees throughout fiscal 2010. I expect 2010 to be a year of 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. 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, February 4, at 4 p.m. Central Time, to discuss the Company’s first 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 8614240).
 
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Forward-Looking Statements
 
Statements in this press release regarding the likelihood, timing and size of potential international and domestic opportunities, projects and contracts which the Company may receive or participate in, expected total orders to be received under significant Company contracts and orders described herein, the likelihood and timing of benefits resulting from the government’s Stimulus Program, amounts and timing of fiscal 2010 future revenues, earnings, sales growth, orders, growth, the success in capturing international AMI opportunities, the global economic recovery, the Company’s ability to complete acquisitions, 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 timing and content of purchase order releases under the Company’s Gas AMI contract with PG&E; the Company’s successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; the availability and pricing of acquisition targets, 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 of certain raw materials including steel and copper; 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.
 
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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
December 31, 2009
  
Three Months
Ended
December 31, 2008
       
Net Sales
$112,705
  
147,357
Cost and Expenses:
      
Cost of sales
67,436
  
92,616
SG&A
39,208
  
39,280
Amortization of intangible assets
2,884
  
4,603
Interest expense
1,482
  
2,618
Other expenses (income), net
1,023
  
(112)
Total costs and expenses
112,033
  
139,005
       
Earnings before income taxes
672
  
8,352
Income taxes
236
  
2,512
       
Net earnings from continuing operations
436
  
5,840
       
Loss from discontinued operations, net of tax
   benefit of $11
 
-
  
 
(20)
       
Net earnings
$436
  
5,820
       
Earnings per share:
      
Basic
      
Continuing operations
0.02
  
0.22
Discontinued operations
-
  
-
Net earnings
$0.02
  
0.22
       
Diluted
      
Continuing operations
0.02
  
0.22
Discontinued operations
-
  
-
Net earnings
$0.02
  
0.22
       
Average common shares O/S:
      
Basic
26,423
  
26,108
Diluted
26,709
  
26,422

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in thousands)
  
     
 
Three Months Ended
December 31,
  
 
2009
  
2008
  
         
Net Sales
        
Utility Solutions Group
$61,224
  
88,201
  
Test
26,986
  
35,489
  
Filtration
24,495
  
23,667
  
Totals
$112,705
  
147,357
  
         
EBIT
        
Utility Solutions Group
$4,570
  
10,555
  
Test
700
  
3,234
  
Filtration
2,358
  
2,863
  
Corporate
(5,474)
(1)
(5,682)
(1)
Consolidated EBIT
2,154
  
10,970
  
Less: Interest expense
(1,482)
  
(2,618)
  
Earnings before income taxes
 
$672
  
 
8,352
  
         

Note:Depreciation and amortization expense was $5.6 million and $7.4 million for the quarters ended December 31, 2009 and 2008, respectively.
 
(1)  Includes $1.2 million of amortization of acquired intangible assets.

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
       
 
December 31, 2009
  
September 30, 2009
       
Assets
      
Cash and cash equivalents
$35,353
  
44,630
Accounts receivable, net
83,963
  
108,620
Costs and estimated earnings on long-term
   contracts
 
7,980
  
 
10,758
Inventories
88,477
  
82,020
Current portion of deferred tax assets
22,021
  
20,417
Other current assets
13,294
  
13,750
Total current assets
251,088
  
280,195
       
Property, plant and equipment, net
70,535
  
69,543
Goodwill
330,670
  
330,719
Intangible assets, net
219,953
  
221,600
Other assets
22,011
  
21,630
 
$894,257
  
923,687
       
Liabilities and Shareholders’ Equity
      
Current maturities of long-term debt
$50,000
  
50,000
Accounts payable
30,318
  
47,218
Current portion of deferred revenue
21,548
  
20,215
Other current liabilities
40,293
  
46,552
Total current liabilities
142,159
  
163,985
Deferred tax liabilities
78,857
  
78,471
Other liabilities
33,490
  
33,424
Long-term debt
120,423
  
130,467
Shareholders’ equity
519,328
  
517,340
 
$894,257
  
923,687

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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
   
 
Three Months Ended
December 31, 2009
Cash flows from operating activities:
  
Net earnings
$436
Adjustments to reconcile net earnings to net cash
  provided by operating activities
  
Depreciation and amortization
5,564
Stock compensation expense
1,031
Changes in current assets and liabilities
(958)
Effect of deferred taxes
(1,218)
Change in deferred revenue and costs, net
598
Other
(251)
Net cash provided by operating activities
5,202
   
Cash flows from investing activities:
  
Additions to capitalized software
(1,381)
Capital expenditures
(3,715)
Net cash used by investing activities
(5,096)
   
Cash flows from financing activities:
  
Principal payments on long-term debt
(10,044)
Proceeds from exercise of stock options
279
Other
601
Net cash used by financing activities
(9,164)
   
Effect of exchange rate changes on cash and cash equivalents
(219)
   
Net decrease in cash and cash equivalents
(9,277)
Cash and cash equivalents, beginning of period
44,630
Cash and cash equivalents, end of period
$35,353
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
               
 
Backlog And Entered Orders – Q1 FY 2010
Utility Solutions
  
 
Test
  
 
Filtration
  
 
Total
Beginning Backlog – 9/30/09
 $132,376
  
  54,240
  
 112,755
  
  299,371
Entered Orders
     74,312
  
  37,071
  
   27,035
  
  138,418
Sales
   (61,224)
  
 (26,986)
  
  (24,495)
  
 (112,705)
Ending Backlog – 12/31/09
 $145,464
  
  64,325
  
 115,295
  
  325,084

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