ESCO Technologies Inc. (NYSE:ESE) Q4 2019 Earnings Conference Call - Final Transcript
Nov 19, 2019 • 05:00 pm ET
allows us to focus on our remaining core operating segments, both on organic growth and continued M&A around this core. On a personal note, I would like to thank Randy Loga and the entire management team and the dedicated employees around the world, who worked so hard to make the packaging business a success, and I wish everyone all the best in the future with Sonoco.
Now I'll turn it over to Gary for the financial discussion.
Gary E. Muenster
Thanks Vic. We wrapped up the year in strong fashion compared to fiscal '18 by delivering solid top line growth coupled with 9% growth in adjusted EBITDA, 13% growth in adjusted EPS, strong cash flow and record entered orders, as all of these items exceeded our previous expectations set earlier. Similar to the past. Similar to the past, our sales, adjusted EBITDA and adjusted EPS not only exceeded our expectations, but they beat the consensus estimate, driven by continued strength across all three core segments.
On a segment basis, filtration sales increased 14% over prior year, or 11% excluding globe. This growth was led by our aerospace businesses, where sales increased $32 million or 19%, resulting from continued strong demand across our extensive aero platforms, both OEM and aftermarket and both commercial and defense. This growth was partially offset by VACCO's navy business, which had lower sales in 2019 resulting from revenue recognition timing items on several large programs. Globe added approximately $9 million of sales in the three months that we own them. Test and Doble both grew sales at better-than-expected amounts and our renewable energy business decreased in 2019, which mitigated our USG sales growth.
Our 2019 adjusted EBITDA was $151 million, compared to $139 million in 2018, and our adjusted EPS was $3.13 a share, compared to $2.77 a share in 2018, which reflects 13% growth. These increases were accomplished through a combination of meaningful sales growth, a favorable sales mix, rigorous cost management, coupled with solid execution across the company and topped off with solid tax planning strategies. Additionally, I think the strength of our 2019 results continues to demonstrate the earnings power that we can generate at higher sales volumes and continues to support our multi-segment, multi-industry strategy.
Our cash flow provided by operating activities for the year was $105 million, which resulted in $224 million of debt outstanding, which reflects an extremely comfortable leverage ratio of 1.68 at September 30th. Q4 cash from operating activities was $68 million, reflecting our strongest quarterly cash flow in history. This was driven by solid earnings and enhanced focus on working capital management and strong cash collections. I'm also really pleased with our entered orders, both in Q4 and for the year, where we set a record by exceeding $900 million of new business for the first time. It was also great to see how our order growth was spread nicely across the operating segments. This order level resulted in an increase in ending backlog of $92 million or 24% from