ESCO Technologies to acquire Ultra Maritime Unit for $550M

ST. LOUIS - ESCO Technologies Inc. (NYSE: ESE) announced today its agreement to acquire the Signature Management & Power division of Ultra Maritime for $550 million. The transaction, which will be funded through cash and incremental debt, is set to enhance ESCO's capabilities in the naval defense sector.

Signature Management & Power, a provider of critical solutions for US and UK naval defense, aligns with ESCO's strategic shift towards higher margin and growth markets. The acquired business specializes in signature and power management for submarines and surface ships, offering technologies that enhance stealth capabilities.

The acquisition is a strategic fit for ESCO, complementing its existing naval programs and expanding its reach in the defense market. With this move, ESCO aims to capitalize on increasing defense spending and the need for upgraded naval defense systems.

Signature Management & Power is headquartered in Long Island, New York, and maintains four facilities in the US and the UK. The business, which employs around 410 people, is expected to generate $175 million in revenue for 2024 with high Adjusted EBITDA margins.

Bryan Sayler, President and CEO of ESCO, expressed enthusiasm for the acquisition, citing the complementary product offerings and growth opportunities in emerging international markets. Pete Crawford, CEO of the Ultra Maritime division, also welcomed the move, anticipating growth and continued customer service excellence under the ESCO umbrella.

The transaction, advised by J.P. Morgan Securities LLC and Bryan Cave Leighton Paisner LLP for ESCO, and by Lazard (NYSE:LAZ) and Weil, Gotshal & Manges (London) LLP for Ultra Maritime, is subject to customary closing conditions and regulatory approvals.

ESCO Technologies, a global provider of engineered products and solutions, serves various end-markets including aviation, space, and defense. The company is also known for its RF test and measurement products, as well as diagnostic instruments for the power industry.

The acquisition announcement will be further discussed in a conference call hosted by ESCO tomorrow morning. This news article is based on a press release statement.

In other recent news, ESCO Technologies has demonstrated robust growth in its Q2 2024 performance. A 9% increase in sales was noted compared to the previous year, largely attributed to the success of the Aerospace, Navy, and Utility businesses.

Despite a 5% decrease in orders, the company reported a 24% rise in adjusted earnings per share to $0.94. ESCO Technologies remains confident about its future, keeping its 2024 guidance and predicting a third consecutive record year.

The company has been eyeing strategic acquisitions, particularly in high-growth markets like Aerospace, Navy, and Electrification. Challenges faced include labor availability and delays in obtaining key raw materials for large projects. However, the company is prepared to adjust capacity and reallocate resources to address these issues.

In conclusion, these recent developments highlight ESCO Technologies' commitment to growth and strategic acquisitions. Despite a few challenges, the company's optimism and focus on operational execution keep it on track to meet its 2024 commitments.

InvestingPro Insights

In light of ESCO Technologies Inc.'s (NYSE: ESE) recent acquisition of Signature Management & Power, it is pertinent to assess the company's financial health and market position. According to InvestingPro data, ESCO currently boasts a market capitalization of $2.65 billion, with a P/E ratio standing at 27.04.

This valuation metric indicates that investors are willing to pay a higher price for earnings, which may reflect market optimism about the company's growth prospects, especially following strategic acquisitions such as this one.

Notably, ESCO's revenue growth over the last twelve months as of Q2 2024 has been positive at 8.64%, a sign that the company is on an upward trajectory in terms of sales. This is complemented by a solid gross profit margin of 39.51%, underscoring the company's ability to retain a significant portion of sales as gross profit.

An InvestingPro tip highlights that ESCO has maintained dividend payments for 16 consecutive years, which may appeal to income-focused investors looking for consistent returns. Moreover, analysts predict the company will be profitable this year, further reinforcing the company's financial stability and potential for sustained growth.

For those interested in deeper analysis and additional insights, InvestingPro offers more tips on ESCO Technologies, which can be accessed at https://www.investing.com/pro/ESE. Investors can also take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to valuable insights that can inform investment decisions.

To summarize, ESCO Technologies appears to be in a strong financial position with consistent revenue growth and profitability. The company's strategic acquisition of Signature Management & Power is poised to further enhance its market standing in the defense sector, potentially leading to continued growth and shareholder value.

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