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| 8-K - ESCO TECHNOLOGIES INC. 8K - ESCO TECHNOLOGIES INC | esco8kfeb4.htm |
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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One
“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:
|
·
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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.
|
|
·
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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.
|
|
·
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Test
segment order for two large shielded enclosures worth over $14
million.
|
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Two
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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Three
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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Four
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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Five
|
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
|
||
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Net
Sales
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$112,705
|
147,357
|
|
|
Cost
and Expenses:
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|||
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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
|
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Income
taxes
|
236
|
2,512
|
|
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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:
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|||
|
Basic
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|||
|
Continuing
operations
|
0.02
|
0.22
|
|
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Discontinued
operations
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-
|
-
|
|
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Net
earnings
|
$0.02
|
0.22
|
|
|
Diluted
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|||
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Continuing
operations
|
0.02
|
0.22
|
|
|
Discontinued
operations
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-
|
-
|
|
|
Net
earnings
|
$0.02
|
0.22
|
|
|
Average
common shares O/S:
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|||
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Basic
|
26,423
|
26,108
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|
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Diluted
|
26,709
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26,422
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Six
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ESCO
TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed
Business Segment Information
(Unaudited)
(Dollars
in thousands)
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||||
|
Three
Months Ended
December
31,
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||||
|
2009
|
2008
|
|||
|
Net Sales
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||||
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Utility
Solutions Group
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$61,224
|
88,201
|
||
|
Test
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26,986
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35,489
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||
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Filtration
|
24,495
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23,667
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||
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Totals
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$112,705
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147,357
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||
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EBIT
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||||
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Utility
Solutions Group
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$4,570
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10,555
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||
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Test
|
700
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3,234
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||
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Filtration
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2,358
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2,863
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||
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Corporate
|
(5,474)
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(1)
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(5,682)
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(1)
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Consolidated
EBIT
|
2,154
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10,970
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||
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Less:
Interest expense
|
(1,482)
|
(2,618)
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Earnings
before income taxes
|
$672
|
8,352
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||
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Note:Depreciation
and amortization expense was $5.6 million and $7.4 million for the
quarters ended December 31, 2009 and 2008,
respectively.
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(1) Includes
$1.2 million of amortization of acquired intangible
assets.
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Seven
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ESCO
TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
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December
31, 2009
|
September
30, 2009
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Assets
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|||
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Cash
and cash equivalents
|
$35,353
|
44,630
|
|
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Accounts
receivable, net
|
83,963
|
108,620
|
|
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Costs
and estimated earnings on long-term
contracts
|
7,980
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10,758
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Inventories
|
88,477
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82,020
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Current
portion of deferred tax assets
|
22,021
|
20,417
|
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Other
current assets
|
13,294
|
13,750
|
|
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Total
current assets
|
251,088
|
280,195
|
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Property,
plant and equipment, net
|
70,535
|
69,543
|
|
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Goodwill
|
330,670
|
330,719
|
|
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Intangible
assets, net
|
219,953
|
221,600
|
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Other
assets
|
22,011
|
21,630
|
|
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$894,257
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923,687
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||
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Liabilities and Shareholders’
Equity
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|||
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Current
maturities of long-term debt
|
$50,000
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50,000
|
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Accounts
payable
|
30,318
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47,218
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Current
portion of deferred revenue
|
21,548
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20,215
|
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Other
current liabilities
|
40,293
|
46,552
|
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Total
current liabilities
|
142,159
|
163,985
|
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Deferred
tax liabilities
|
78,857
|
78,471
|
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Other
liabilities
|
33,490
|
33,424
|
|
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Long-term
debt
|
120,423
|
130,467
|
|
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Shareholders’
equity
|
519,328
|
517,340
|
|
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$894,257
|
923,687
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Eight
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ESCO
TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars
in thousands)
|
|
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Three
Months Ended
December
31, 2009
|
|
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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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Nine
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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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