ESCO Announces First Quarter Results
ST. LOUIS, Feb 04, 2010 /PRNewswire via COMTEX/ -- 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.
"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:
- 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.
- 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.
- Test segment order for two large shielded enclosures worth over $14 million.
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).
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.
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.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Three Months
Ended Ended
December 31, December 31,
2009 2008
---- ----
Net Sales $112,705 147,357
Cost and Expenses:
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
Income taxes 236 2,512
--- -----
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:
Basic
Continuing operations 0.02 0.22
Discontinued operations - -
--- ---
Net earnings $0.02 0.22
===== ====
Diluted
Continuing operations 0.02 0.22
Discontinued operations - -
--- ---
Net earnings $0.02 0.22
===== ====
Average common shares O/S:
Basic 26,423 26,108
====== ======
Diluted 26,709 26,422
====== ======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in thousands)
Three Months Ended December
31,
----------------------------
2009 2008
---- ----
Net Sales
----------
Utility Solutions Group $61,224 88,201
Test 26,986 35,489
Filtration 24,495 23,667
------ ------
Totals $112,705 147,357
======== =======
EBIT
----
Utility Solutions Group $4,570 10,555
Test 700 3,234
Filtration 2,358 2,863
Corporate (5,474) (1) (5,682) (1)
------ ------
Consolidated EBIT 2,154 10,970
Less: Interest expense (1,482) (2,618)
------ ------
Earnings before income taxes $672 8,352
==== =====
Note: Depreciation and amortization expense was $5.6 million and
$7.4 million for the quarters ended December 31, 2009 and 2008,
respectively.
(1) Includes $1.2 million of amortization of acquired intangible
assets.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
December September
31, 30,
2009 2009
---- ----
Assets
------
Cash and cash equivalents $35,353 44,630
Accounts receivable, net 83,963 108,620
Costs and estimated earnings on
long-term contracts 7,980 10,758
Inventories 88,477 82,020
Current portion of deferred tax
assets 22,021 20,417
Other current assets 13,294 13,750
------ ------
Total current assets 251,088 280,195
Property, plant and equipment, net 70,535 69,543
Goodwill 330,670 330,719
Intangible assets, net 219,953 221,600
Other assets 22,011 21,630
------ ------
$894,257 923,687
======== =======
Liabilities and Shareholders'
Equity
-----------------------------
Current maturities of long-term
debt $50,000 50,000
Accounts payable 30,318 47,218
Current portion of deferred revenue 21,548 20,215
Other current liabilities 40,293 46,552
------ ------
Total current liabilities 142,159 163,985
Deferred tax liabilities 78,857 78,471
Other liabilities 33,490 33,424
Long-term debt 120,423 130,467
Shareholders' equity 519,328 517,340
------- -------
$894,257 923,687
======== =======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months
Ended December
31, 2009
---------------
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
=======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
Backlog And
Entered
Orders -Q1 Utility
FY 2010 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
======== ====== ======= =======
SOURCE ESCO Technologies Inc.
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