Shares of military electronics and power equipment supplier Engineered Support Systems (NASDAQ:EASI) have fallen somewhat since the company announced in early December that it would buy Pivotal Power for $10 million in cash and a bit of debt. They're down a bit more in morning trading despite news of strong fiscal Q1 (ended Jan. 31) financial results.

Engineered Support said revenues for the quarter rose more than 60% to just above $195 million. That was driven mostly by acquisitions, though organic sales growth still checked in at a solid 10% year over year. (Management spent heavily on acquisitions last year, buying three companies for more than $99 million net of acquired cash.) Net income increased 87% as operating and gross margins both improved over last year's numbers. EPS figures, which beat Street estimates, rose significantly despite a higher share count.

Both business segments -- support systems and support services -- saw strong revenue and operating income growth during the quarter. And management has reason to be pleased going forward: Strong order flow has the company sitting on some $1.5 billion in backlog, up from $1.1 billion at the same time last year.

All this has led Engineered Support to boost its sales and earnings outlook for fiscal 2004. It is now pointing investors toward sales of $780 million and net income of between $2.50 and $2.55 per share, up 36% and 49%, respectively, from 2003 numbers.

Currently trading at about 20 times the new low-end estimate for this year, Engineered Support certainly looks interesting as a growing company with operating cash flow well in excess of reported net income, a history of strong free cash flow (mitigated by acquisitions), and a proven ability to successfully fold in its acquisitions.

Talk over the outlook for this acquisitive company on our Engineered Support Systems discussion board.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story. He can be reached via email.