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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

OR

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

COMMISSION FILE NUMBER 1-10596

ESCO TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

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 Code)

(314) 213-7200

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

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

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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes 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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

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 No

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

Class

    

Shares outstanding at July 31, 2023

Common stock, $.01 par value per share

 

25,782,563

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

Three Months Ended

June 30, 

    

2023

    

2022

Net sales

    

$

248,749

    

219,066

Costs and expenses:

 

 

Cost of sales

 

147,274

 

134,454

Selling, general and administrative expenses

 

55,376

 

47,479

Amortization of intangible assets

 

7,132

 

6,406

Interest expense, net

 

2,495

 

1,331

Other expenses (income), net

 

966

 

(106)

Total costs and expenses

 

213,243

 

189,564

Earnings before income taxes

 

35,506

 

29,502

Income tax expense

 

7,563

 

6,329

Net earnings

$

27,943

 

23,173

 

 

Earnings per share:

 

 

Basic - Net earnings

1.08

0.90

Diluted - Net earnings

$

1.08

 

0.89

See accompanying notes to condensed consolidated financial statements.

2

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

Nine Months Ended

June 30,

    

2023

    

2022

Net sales

$

683,386

 

601,004

Costs and expenses:

 

 

 

Cost of sales

 

415,953

 

 

371,134

Selling, general and administrative expenses

 

160,555

 

 

142,073

Amortization of intangible assets

 

21,023

 

 

19,383

Interest expense, net

 

6,422

 

 

3,084

Other expenses (income), net

 

1,678

 

 

(677)

Total costs and expenses

 

605,631

 

 

534,997

 

 

 

Earnings before income taxes

 

77,755

 

 

66,007

Income tax expense

 

17,207

 

 

14,727

Net earnings

$

60,548

 

51,280

 

 

Earnings per share:

 

 

Basic — Net earnings

$

2.35

1.98

Diluted — Net earnings

$

2.34

1.97

See accompanying notes to condensed consolidated financial statements.

3

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

Three Months Ended

Nine Months Ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Net earnings

$

27,943

 

23,173

60,548

51,280

Other comprehensive income (loss), net of tax:

 

 

Foreign currency translation adjustments

 

(821)

 

(11,905)

12,926

(17,216)

Total other comprehensive income (loss), net of tax

 

(821)

 

(11,905)

12,926

(17,216)

Comprehensive income

$

27,122

 

11,268

73,474

34,064

See accompanying notes to condensed consolidated financial statements.

4

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

June 30, 

September 30, 

    

2023

    

2022

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

56,052

 

97,724

Accounts receivable, net of allowance for credit losses of $3,112 and $2,612, respectively

 

192,146

 

164,645

Contract assets

 

128,284

 

125,154

Inventories

 

192,493

 

162,403

Other current assets

 

24,847

 

22,696

Total current assets

 

593,822

 

572,622

Property, plant and equipment, net of accumulated depreciation of $171,569 and $165,322, respectively

 

155,337

 

155,973

Intangible assets, net of accumulated amortization of $196,951 and $175,928, respectively

 

398,418

 

394,464

Goodwill

 

505,590

 

492,709

Operating lease assets

40,314

29,150

Other assets

 

10,028

 

9,538

Total assets

$

1,703,509

1,654,456

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Current maturities of long-term debt

$

20,000

20,000

Accounts payable

 

76,761

78,746

Contract liabilities

 

122,526

125,009

Accrued salaries

 

38,428

40,572

Accrued other expenses

 

51,236

53,802

Total current liabilities

 

308,951

318,129

Deferred tax liabilities

 

78,585

82,023

Non-current operating lease liabilities

36,815

24,853

Other liabilities

 

44,115

48,294

Long-term debt

 

128,000

133,000

Total liabilities

 

596,466

606,299

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 30,751,449 and 30,707,748 shares, respectively

 

308

307

Additional paid-in capital

 

305,555

301,553

Retained earnings

 

959,381

905,022

Accumulated other comprehensive loss, net of tax

 

(18,839)

(31,764)

 

1,246,405

1,175,118

Less treasury stock, at cost: 4,995,414 and 4,854,997 common shares, respectively

 

(139,362)

(126,961)

Total shareholders’ equity

 

1,107,043

1,048,157

Total liabilities and shareholders’ equity

$

1,703,509

1,654,456

See accompanying notes to condensed consolidated financial statements.

5

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

Nine Months Ended

June 30, 

    

2023

    

2022

Cash flows from operating activities:

 

  

 

  

Net earnings

$

60,548

 

51,280

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

Depreciation and amortization

 

37,699

36,247

Stock compensation expense

 

7,007

 

5,318

Changes in assets and liabilities

 

(72,346)

 

(60,172)

Effect of deferred taxes

(3,706)

9,020

Net cash provided by operating activities

 

29,202

 

41,693

Cash flows from investing activities:

 

 

Acquisition of business, net of cash acquired

 

(17,694)

 

(15,592)

Additions to capitalized software and other

 

(9,263)

 

(9,359)

Capital expenditures

(16,993)

(25,893)

Net cash used by investing activities

 

(43,950)

 

(50,844)

Cash flows from financing activities:

 

 

Proceeds from long-term debt and short-term borrowings

 

88,000

 

111,000

Principal payments on long-term debt and short-term borrowings

 

(93,000)

 

(64,000)

Purchases of common stock into treasury

(12,401)

(19,878)

Dividends paid

 

(6,189)

 

(6,219)

Other

 

(2,557)

 

(2,787)

Net cash (used) provided by financing activities

(26,147)

18,116

Effect of exchange rate changes on cash and cash equivalents

(777)

(4,178)

Net (decrease) increase in cash and cash equivalents

(41,672)

4,787

Cash and cash equivalents, beginning of period

97,724

56,232

Cash and cash equivalents, end of period

$

56,052

61,019

 

 

Supplemental cash flow information:

 

 

Interest paid

$

5,564

 

1,685

Income taxes paid (including state and foreign)

 

18,313

 

5,574

See accompanying notes to condensed consolidated financial statements.

6

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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).

The Company’s results for the three-month period ended June 30, 2023 are not necessarily indicative of the results for the entire 2023 fiscal year. References to the third quarters of 2023 and 2022 represent the fiscal quarters ended June 30, 2023 and 2022, respectively. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

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) by using the treasury stock method. The number of shares used in the calculation of earnings per share for each period presented is as follows (in thousands):

    

Three Months

Nine Months

Ended June 30, 

Ended June 30, 

    

2023

    

2022

    

2023

    

2022

Weighted Average Shares Outstanding — Basic

 

25,757

 

25,856

25,808

 

25,959

Dilutive Restricted Shares

70

94

82

91

Adjusted Shares — Diluted

 

25,827

 

25,950

25,890

 

26,050

3.    ACQUISITION

On February 1, 2023, the Company acquired CMT Materials, LLC and its affiliate Engineered Syntactic Systems, LLC (CMT) for a purchase price of approximately $18 million, net of cash acquired. CMT, based in Attleboro, Massachusetts, is a supplier of syntactic materials for buoyancy and specialty applications. Since the date of acquisition, the operating results for the CMT business have been included as part of Globe in the A&D segment. The acquisition date fair value of the assets acquired and liabilities assumed primarily were as follows: approximately $1.7 million of accounts receivable, $3.0 million of inventory, $1.3 million of property, plant and equipment, $1.2 million of accounts payable and accrued expenses, $7.3 million of identifiable intangible assets, mainly consisting of customer relationships totaling $6.2 million. The acquired goodwill of $5.6 million related to excess value associated with opportunities to expand the services and products that the Company can offer to its customers. The Company anticipates that the goodwill will be deductible for tax purposes. The Company received a $0.2 million working capital settlement during the third quarter of 2023.

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 stock unit awards, and to non-employee directors under a non-employee directors compensation plan.

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

Compensation expense related to the PARS/RSU awards was $1.4 million and $6.0 million for the three and nine-month periods ended June 30, 2023, respectively, and $1.6 million and $4.4 million for the corresponding periods in 2022. As of June 30, 2023, there were 196,648 unvested stock units outstanding.

7

Non-Employee Directors Plan

Compensation expense related to the non-employee director grants was $0.3 million and $1.0 million for the three and nine-month periods ended June 30, 2023, respectively, and $0.3 million and $0.9 million for the corresponding periods in 2022.

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 $1.7 million and $7.0 million for the three and nine-month periods ended June 30, 2023, respectively, and $1.9 million and $5.3 million for the corresponding periods in 2022. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $0.2 million and $0.9 million for the three and nine-month periods ended June 30, 2023, respectively, and $0.4 million and $1.0 million for the corresponding periods in 2022. As of June 30, 2023, there was $10.7 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 1.8 years.

5.    INVENTORIES

Inventories consist of the following:

June 30, 

September 30, 

(In thousands)

    

2023

    

2022

Finished goods

$

37,082

 

32,471

Work in process

 

48,579

 

38,492

Raw materials

 

106,832

 

91,440

Total inventories

$

192,493

 

162,403

6.

GOODWILL AND OTHER INTANGIBLE ASSETS

Included on the Company’s Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 are the following intangible assets gross carrying amounts and accumulated amortization:

    

June 30, 

    

September 30, 

(Dollars in thousands)

    

2023

    

2022

Goodwill

$

505,590

    

492,709

 

Intangible assets with determinable lives:

 

Patents

 

Gross carrying amount

$

2,433

2,353

Less: accumulated amortization

 

1,186

1,091

Net

$

1,247

1,262

 

Capitalized software

 

Gross carrying amount

$

118,529

106,583

Less: accumulated amortization

 

77,308

70,476

Net

$

41,221

36,107

 

Customer relationships

 

Gross carrying amount

$

298,110

287,447

Less: accumulated amortization

 

109,186

96,921

Net

$

188,924

190,526

 

Other

 

Gross carrying amount

$

14,345

13,985

Less: accumulated amortization

 

9,271

7,440

Net

$

5,074

6,545

Intangible assets with indefinite lives:

 

Trade names

$

161,952

160,024

8

The changes in the carrying amount of goodwill attributable to each business segment for the nine months ended June 30, 2023 is as follows:

Aerospace

(Dollars in millions)

    

USG

    

Test

    

& Defense

    

Total

Balance as of September 30, 2022

$

348.7

 

34.0

 

110.0

 

492.7

Acquisition activity and adjustments

5.6

5.6

Foreign currency translation

7.3

7.3

Balance as of June 30, 2023

$

356.0

34.0

115.6

505.6

7.    BUSINESS SEGMENT INFORMATION

The Company is organized based on the products and services that it offers and classifies its continuing business operations in three reportable segments for financial reporting purposes: Aerospace & Defense, Utility Solutions Group (USG), and RF Shielding and Test (Test).

The Aerospace & Defense segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Mayday Manufacturing Co. (Mayday), Globe Composite Solutions, LLC (Globe) and Westland Technologies Inc. (Westland). 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 aerospace and defense applications; unique filter mechanisms used in micro-propulsion devices for satellites, custom designed filters for manned aircraft and submarines; products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, and other communications, sealing, surface control and hydrodynamic related applications to enhance U.S. Navy maritime survivability; precision-tolerance machined components for the aerospace and defense industry; and metal processing services.

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

The Test segment’s operations consist primarily of ETS-Lindgren Inc. and related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in designing and manufacturing products which provide its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy. ETS-Lindgren also manufactures radio frequency shielding products and components used by manufacturers of medical equipment, communications systems, electronic products, and shielded rooms for high-security data processing and secure communication.

9

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

Nine Months

Ended June 30, 

Ended June 30, 

(In thousands)

    

2023

    

2022

    

2023

    

2022

NET SALES

  

  

  

  

Aerospace & Defense

$

103,469

92,606

285,434

247,671

USG

89,966

67,201

240,172

194,877

Test

55,314

59,259

157,780

158,456

Consolidated totals

$

248,749

219,066

683,386

601,004

EBIT

Aerospace & Defense

$

21,665

20,738

52,996

45,042

USG

20,351

13,135

50,543

37,840

Test

8,643

8,354

21,280

20,813

Corporate (loss)

(12,658)

(11,394)

(40,642)

(34,604)

Consolidated EBIT

38,001

30,833

84,177

69,091

Less: Interest expense

(2,495)

(1,331)

(6,422)

(3,084)

Earnings before income taxes

$

35,506

29,502

77,755

66,007

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 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:

    

June 30, 

September 30, 

(In thousands)

    

2023

    

2022

Total borrowings

$

148,000

 

153,000

Current portion of long-term debt

 

(20,000)

 

(20,000)

Total long-term debt, less current portion

$

128,000

 

133,000

The Credit Facility includes a $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 eight banks led by JP Morgan Chase Bank, N.A., as Administrative Agent. The Credit Facility matures September 27, 2024, with balance due by this date.

At June 30, 2023, the Company had approximately $345 million available to borrow under the Credit Facility, plus the $250 million increase option, subject to lenders’ consent, in addition to $56.1 million cash on hand. The Company classified $20 million as the current portion of long-term debt as of June 30, 2023, as the Company intends to repay this amount within the next twelve months; however, the Company has no contractual obligation to repay such amount during the next twelve months. The letters of credit issued and outstanding under the Credit Facility totaled $7.4 million at June 30, 2023.

10

Interest on borrowings under the Credit Facility is calculated at a spread over either the Standard Overnight Financing Rate (SOFR) or the prime rate depending on various factors. The Credit Facility also requires a facility fee ranging from 10 to 25 basis points per annum on the unused portion. The interest rate spreads on the facility and the facility fee are subject to increase or decrease depending on the Company’s leverage ratio. The weighted average interest rates were 6.05% and 5.57% for the three and nine-month periods ending June 30, 2023, respectively, and 2.20% and 1.57% for the three and nine-month periods ending June 30, 2022. As of June 30, 2023, the Company was in compliance with all covenants.

9.    INCOME TAX EXPENSE

The third quarter 2023 effective income tax rate was 21.3% compared to 21.5% in the third quarter of 2022. The effective income tax rate in the first nine months of 2023 was 22.1% compared to 22.3% for the first nine months of 2022. The income tax expense in the third quarter and first nine months of 2023 was favorably impacted by tax return to provision true-ups related to the federal research and development tax credit, decreasing the third quarter and year-to-date rate by 0.9% and 0.4%, respectively.

The income tax expense in the third quarter and first nine months of 2022 was favorably impacted by tax return to provision true-ups on U.S. tax on the distribution of foreign earnings, and the re-rating of deferred taxes as a result of a Vermont law change, decreasing the third quarter and year-to-date effective tax rate by 1.6% and 0.7%, respectively.

10.    SHAREHOLDERS’ EQUITY

The change in shareholders’ equity for the first three and nine months of 2023 and 2022 is shown below (in thousands):

Three Months Ended June 30, 

Nine Months Ended June 30, 

    

2023

    

2022

    

2023

    

2022

Common stock

Beginning balance

308

307

307

307

Stock plans

1

Ending balance

308

307

308

307

Additional paid-in-capital

Beginning balance

304,184

298,353

301,553

297,644

Stock plans

1,371

1,510

4,002

2,219

Ending balance

305,555

299,863

305,555

299,863

Retained earnings

Beginning balance

933,499

854,946

905,022

830,989

Net earnings

27,943

23,173

60,548

51,280

Dividends paid

(2,061)

(2,069)

(6,189)

(6,219)

Ending balance

959,381

876,050

959,381

876,050

Accumulated other comprehensive income (loss)

Beginning balance

(18,018)

(7,472)

(31,764)

(2,161)

Foreign currency translation

(821)

(11,905)

12,925

(17,216)

Ending balance

(18,839)

(19,377)

(18,839)

(19,377)

Treasury stock

Beginning balance

(139,178)

(124,961)

(126,961)

(107,083)

Share repurchases

(184)

(2,000)

(12,401)

(19,878)

Ending balance

(139,362)

(126,961)

(139,362)

(126,961)

Total equity

1,107,043

1,029,882

1,107,043

1,029,882

11

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 June 30, 2023 and September 30, 2022 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables, 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, and are immaterial.

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 and nine-month periods ended June 30, 2023.

12

12.  REVENUES

Disaggregation of Revenues

Revenues by customer type, geographic location, and revenue recognition method for the three and nine-month periods ended June 30, 2023 are presented in the tables 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 tables below also include a reconciliation of the disaggregated revenue within each reportable segment.

Three months ended June 30, 2023

Aerospace

(In thousands)

    

& Defense

    

USG

    

Test

    

Total

Customer type:

 

  

 

  

 

  

 

  

Commercial

$

51,303

$

88,442

$

48,407

$

188,152

Government

 

52,166

 

1,524

 

6,907

 

60,597

Total revenues

$

103,469

$

89,966

$

55,314

$

248,749

Geographic location:

 

 

 

 

United States

$

86,031

$

55,011

$

32,246

$

173,288

International

 

17,438

 

34,955

 

23,068

 

75,461

Total revenues

$

103,469

$

89,966

$

55,314

$

248,749

Revenue recognition method:

 

 

 

 

Point in time

$

48,496

$

74,128

$

11,496

$

134,120

Over time

 

54,973

 

15,838

 

43,818

 

114,629

Total revenues

$

103,469

$

89,966

$

55,314

$

248,749

Nine months ended June 30, 2023

Aerospace

 

(In thousands)

    

& Defense

    

USG

    

Test

    

Total

Customer type:

 

  

 

  

 

  

 

  

Commercial

 

$

136,271

$

236,715

$

137,587

$

510,573

Government

149,163

 

3,457

 

20,193

 

172,813

Total revenues

 

$

285,434

$

240,172

$

157,780

$

683,386

Geographic location:

 

 

 

United States

 

$

237,481

$

154,410

$

87,253

$

479,144

International

47,953

 

85,762

 

70,527

 

204,242

Total revenues

 

$

285,434

$

240,172

$

157,780

$

683,386

Revenue recognition method:

 

 

 

Point in time

 

$

129,355

$

194,240

$

32,565

$

356,160

Over time

156,079

 

45,932

 

125,215

 

327,226

Total revenues

 

$

285,434

$

240,172

$

157,780

$

683,386

13

Revenues by customer type, geographic location, and revenue recognition method for the three and nine-month periods ended June 30, 2022 are presented in the tables below.

Three months ended June 30, 2022

Aerospace

    

    

    

(In thousands)

    

& Defense

    

USG

    

Test

    

Total

Customer type:

Commercial

$

38,918

$

65,610

$

54,449

$

158,977

Government

 

53,688

 

1,591

 

4,810

 

60,089

Total revenues

$

92,606

$

67,201

$

59,259

$

219,066

Geographic location:

United States

$

79,536

$

41,822

$

34,662

$

156,020

International

 

13,070

 

25,379

 

24,597

 

63,046

Total revenues

$

92,606

$

67,201

$

59,259

$

219,066

Revenue recognition method:

 

 

 

 

Point in time

$

35,238

$

53,656

$

15,827

$

104,721

Over time

 

57,368

 

13,545

 

43,432

 

114,345

Total revenues

$

92,606

$

67,201

$

59,259

$

219,066

Nine months ended June 30, 2022

Aerospace

    

    

    

(In thousands)

    

& Defense

    

USG

    

Test

    

Total

Customer type:

Commercial

$

100,407

$

191,832

$

147,390

$

439,629

Government

 

147,264

 

3,045

 

11,066

 

161,375

Total revenues

$

247,671

$

194,877

$

158,456

$

601,004

Geographic location:

United States

$

212,849

$

122,021

$

88,708

$

423,578

International

 

34,822

 

72,856

 

69,748

 

177,426

Total revenues

$

247,671

$

194,877

$

158,456

$

601,004

Revenue recognition method:

 

 

 

 

Point in time

$

99,464

$

155,693

$

43,488

$

298,645

Over time

 

148,207

 

39,184

 

114,968