ESCO Announces Second Quarter Results; Reports Record Orders and Backlog
ST. LOUIS, May 4, 2010 /PRNewswire via COMTEX/ --ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the second quarter ended March 31, 2010.
EPS is presented from "Continuing Operations" and "Discontinued Operations." Fiscal 2009 discontinued operations include the results of Comtrak which was sold in March 2009.
Second Quarter 2010 Highlights
- Net sales were $129.3 million ($242.0 million year-to-date);
- EPS was $0.22 per share ($0.24 per share year-to-date);
- Entered orders were $218.6 million ($357 million year-to-date), representing record quarterly order volume, and resulting in a book-to-bill ratio of 1.7x; and
- Backlog increased $89.3 million (27 percent) to an all-time high of $414.4 million.
Chairman's Commentary
Vic Richey, Chairman and Chief Executive Officer, commented, "I am extremely pleased with our second quarter results, as we beat our profit, cash flow and order projections. With solid execution across all three segments, we exceeded our internal EBIT and EPS targets by more than 10 percent, and surpassed our order goals by nearly 17 percent, with Aclara being the biggest contributor to the upside.
"Following our significant first quarter orders, we realized a 58-percent increase in orders sequentially during the second quarter, resulting in year-to-date orders of $357 million. Clearly, entered orders and the record-high backlog are the highlights of our year-to-date performance. This order momentum was realized across the Company, with all three segments reflecting backlog growth since the start of the fiscal year.
"At the halfway point, I'm very comfortable with where we are in relation to meeting our full-year operating goals. My confidence in the balance of the fiscal year has been significantly bolstered by the level and mix of our shippable backlog.
"Looking forward, we remain confident in our ongoing business prospects across all segments of our business, both domestically and internationally. Our Aclara products, in particular, are well positioned on several international projects in Central America and South America as well as Asia. We expect these geographic areas to be significant contributors to our multi-year growth outlook."
Entered Orders
Entered orders in the 2010 second quarter were $218.6 million, resulting in a book-to-bill ratio of 169 percent of sales.
Second Quarter Order Highlights:
- Aclara RF AMI gas product orders with PG&E were $19.1 million, bringing total PG&E gas project orders to 4.1 million units and $226 million, representing the entire quantity of units expected in the original contract.
- Aclara RF AMI water orders for the New York City Water project were $22.4 million, bringing total NYC water orders to $57.4 million cumulative to date.
- Aclara RF AMI water orders with San Francisco Public Utilities were $13 million.
- Aclara PLS AMI orders were $55.2 million, including $36.7 million from COOPs, $11.0 million from international customers and $7.5 million from IOUs.
- Test segment orders were $52.2 million, including an order for two large RF shielded enclosures worth over $14 million.
Significant Contracts Signed (Not in Backlog):
- 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 the City of Toronto, with orders under the contract expected to total $34 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 July 20 to stockholders of record on July 6.
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 we expect to develop into orders and sales over time. I expect the balance of 2010 to reflect 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, as well as our new product "roadmap." 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, May 4, at 4 p.m. Central Time, to discuss the Company's second 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 1248444).
Forward-Looking Statements
Statements in this press release regarding the likelihood, timing and size of potential international and domestic opportunities, achievement of fiscal 2010 operating goals, 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, amounts and timing of fiscal 2010 and beyond revenues, earnings, sales growth, orders, the success in capturing international AMI opportunities, the global economic recovery, 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 Company's successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; 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 and availability of certain raw materials including steel and copper; worldwide availability of electronic components; 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.
- tables attached -
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations (Unaudited)
(Dollars in thousands, except per share
amounts)
-------- --------
Three Three
Months Months
Ended Ended
March March
31, 31,
2010 2009
------- -------
Net Sales $129,281 154,156
Cost and Expenses:
Cost of sales 79,399 92,226
SG&A 36,809 38,237
Amortization of intangible assets 2,887 4,985
Interest expense 755 1,756
Other expenses (income), net 288 357
--- ---
Total costs and expenses 120,138 137,561
------- -------
Earnings before income taxes 9,143 16,595
Income taxes 3,177 5,990
----- -----
Net earnings from continuing
operations 5,966 10,605
Loss from discontinued operations, net of tax
benefit
of $101 - (177)
Loss on sale from discontinued operations, net of tax
benefit of $905 - (32)
- ---
Net loss from discontinued
operations - (209)
Net earnings $5,966 10,396
====== ======
Earnings per share:
Basic
Continuing operations 0.23 0.41
Discontinued operations - (0.01)
- -----
Net earnings $0.23 0.40
===== ====
Diluted
Continuing operations 0.22 0.40
Discontinued operations - (0.01)
- -----
Net earnings $0.22 0.39
===== ====
Average common shares O/S:
Basic 26,440 26,177
====== ======
Diluted 26,702 26,470
====== ======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
-------- --------
Six Six
Months Months
Ended Ended
March March
31, 31,
2010 2009
------- -------
Net Sales $241,986 301,513
Cost and Expenses:
Cost of sales 146,835 184,842
SG&A 76,017 77,519
Amortization of intangible assets 5,771 9,587
Interest expense 2,237 4,374
Other expenses (income), net 1,311 244
----- ---
Total costs and expenses 232,171 276,566
------- -------
Earnings before income taxes 9,815 24,947
Income taxes 3,412 8,502
----- -----
Net earnings from continuing
operations 6,403 16,445
Loss from discontinued operations, net of tax benefit
of $112 - (197)
Loss on sale from discontinued operations, net of
tax of $905 - (32)
- ---
Net loss from discontinued operations - (229)
Net earnings $6,403 16,216
====== ======
Earnings per share:
Basic
Continuing operations 0.24 0.63
Discontinued operations - (0.01)
---- -----
Net earnings $0.24 0.62
===== ====
Diluted
Continuing operations 0.24 0.62
Discontinued operations - (0.01)
---- -----
Net earnings $0.24 0.61
===== ====
Average common shares O/S:
Basic 26,432 26,143
====== ======
Diluted 26,705 26,444
====== ======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in thousands)
Three Months Ended Six Months Ended
March 31, March 31,
------------------- -----------------
2010 2009 2010 2009
---- ---- ---- ----
Net
Sales
------
Utility
Solutions Group $72,009 94,065 133,232 182,266
Test 31,580 33,713 58,567 69,202
Filtration 25,692 26,378 50,187 50,045
------ ------ ------ ------
Totals $129,281 154,156 241,986 301,513
======== ======= ======= =======
EBIT
-----
Utility
Solutions Group $10,621 16,138 15,191 26,693
Test 2,096 3,748 2,796 6,982
Filtration 2,989 4,227 5,347 7,090
Corporate (5,808) (1) (5,762) (2) (11,282) (3) (11,444) (4)
------ ------ ------- -------
Consolidated
EBIT 9,898 18,351 12,052 29,321
Less: Interest
expense (755) (1,756) (2,237) (4,374)
---- ------ ------ ------
Earnings
before income
taxes $9,143 16,595 9,815 24,947
====== ====== ===== ======
Note: Depreciation and amortization expense was $5.6 million and $7.2
million for the quarters ended March 31, 2010 and 2009, respectively, and
$11.2 million and $15.1 million for the six-month periods ended March 31,
2010 and 2009, respectively.
(1) Includes $1.2 million of amortization of acquired intangible assets.
(2) Includes $1.2 million of amortization of acquired intangible assets.
(3) Includes $2.3 million of amortization of acquired intangible assets.
(4) Includes $2.4 million of amortization of acquired intangible assets.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
September
March 31, 30,
2010 2009
---- ----
Assets
------
Cash and cash equivalents $22,925 44,630
Accounts receivable, net 94,432 108,620
Costs and estimated earnings on
long-term contracts 6,378 10,758
Inventories 89,302 82,020
Current portion of deferred tax assets 21,594 20,417
Other current assets 20,068 13,750
------ ------
Total current assets 254,699 280,195
Property, plant and equipment, net 70,422 69,543
Goodwill 330,326 330,719
Intangible assets, net 219,518 221,600
Other assets 21,887 21,630
------ ------
$896,852 923,687
======== =======
Liabilities and Shareholders' Equity
------------------------------------
Current maturities of long-term debt $50,000 50,000
Accounts payable 29,051 47,218
Current portion of deferred revenue 21,645 20,215
Other current liabilities 45,830 46,552
------ ------
Total current liabilities 146,526 163,985
Deferred tax liabilities 78,326 78,471
Other liabilities 31,505 33,424
Long-term debt 120,363 130,467
Shareholders' equity 520,132 517,340
------- -------
$896,852 923,687
======== =======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months
Ended
March 31,
2010
----------
Cash flows from operating activities:
Net earnings $6,403
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 11,157
Stock compensation expense 1,900
Changes in current assets and liabilities (15,158)
Effect of deferred taxes (1,322)
Pension contributions (968)
Other 829
---
Net cash provided by operating activities 2,841
Cash flows from investing activities:
Additions to capitalized software (4,095)
Capital expenditures (7,074)
------
Net cash used by investing activities (11,169)
Cash flows from financing activities:
Proceeds from long-term debt 8,000
Principal payments on long-term debt (18,104)
Dividends paid (2,115)
Proceeds from exercise of stock options 412
Other 655
Net cash used by financing activities (11,152)
-------
Effect of exchange rate changes on cash and cash
equivalents (2,225)
------
Net decrease in cash and cash equivalents (21,705)
Cash and cash equivalents, beginning of period 44,630
------
Cash and cash equivalents, end of period $22,925
=======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
Backlog And Entered Orders - Utility
Q2 Solutions Test Filtration Total
FY 2010 --------- ---- ---------- -----
-------
Beginning Backlog -12/31/09 $145,464 64,325 115,295 325,084
Entered Orders 141,005 52,206 25,348 218,559
Sales (72,009) (31,580) (25,692) (129,281)
------- ------- ------- --------
Ending Backlog - 3/31/10 $214,460 84,951 114,951 414,362
======== ====== ======= =======
Backlog And Entered Orders - Utility
YTD Q2 Solutions Test Filtration Total
FY 2010 ---------- ---- ---------- -----
-------
Beginning Backlog - 9/30/09 $132,376 54,240 112,755 299,371
Entered Orders 215,316 89,277 52,384 356,977
Sales (133,232) (58,567) (50,187) (241,986)
-------- ------- ------- --------
Ending Backlog - 3/31/10 $214,460 84,950 114,952 414,362
======== ====== ======= =======
SOURCE ESCO Technologies Inc.
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