ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today
reported its operating results for the second quarter ended March
31, 2023 (Q2 2023).
Operating Highlights
- Q2 2023 GAAP EPS increased 8 percent to $0.69 per share
compared to $0.64 per share in Q2 2022. Q2 2023
Adjusted EPS increased 17 percent to $0.76 per share compared to
$0.65 per share in Q2 2022.
- Q2 2023 Sales increased $24.2 million (11.8 percent) to $229.1
million compared to $204.9 million in Q2 2022.
- Q2 2023 Entered Orders increased $15.1 million (6 percent) over
the prior year period to $251.6 million (book-to-bill of 1.10x),
resulting in record ending backlog of $741 million.
- Net cash used by operating activities was $5 million YTD 2023,
as cash flow was negatively impacted by higher working capital
requirements, with higher accounts receivable being driven by
increased sales and higher inventory related to timing and supply
chain issues.
- Net debt (total borrowings less cash on hand) was $113 million,
resulting in a 0.86x leverage ratio and $582 million in liquidity
at March 31, 2023.
Bryan Sayler, Chief Executive Officer and President, commented,
“Q2 was another solid quarter operationally, as ESCO delivered
double-digit revenue growth, expanded operating margins, and
achieved 17 percent adjusted earnings per share growth.
It has been an exciting time for me to step into the CEO role. The
business has clear momentum and secular growth drivers that should
carry us through this year and beyond. We continue to see exciting
developments across our aerospace and defense portfolio, with
commercial aerospace, military aerospace and Navy customers driving
high levels of business activity. We also see growth drivers
continue to solidify in the utility and renewable energy markets,
which makes us feel good about the long-term prospects for our
Utility Solutions Group. Our Test business had a slightly down
quarter but serves a variety of strong end markets and offers broad
capabilities that give us confidence in its long-term outlook. It
is an exciting time to be at ESCO and I look forward to working
with leadership across the company as we move our businesses
forward.
“Entered orders remained strong in the quarter, with solid
growth in commercial aerospace and renewables. All
three segments had book-to-bills above 1.0 and for the second
consecutive quarter, we achieved record ending backlog at $741
million.
“Our teams across the company continue to do an excellent job
driving growth and delivering solid operating results while
navigating challenges related to inflation, supply chain
constraints and labor shortages. Even with our strong performance
year-to-date, we are still managing some past-due backlog
challenges driven by these factors. I’d like to personally thank
all of our employees for their dedication, persistence, and
tremendous efforts. Their commitment is key to our solid
results.”
Segment Performance
Aerospace & Defense (A&D)
- Sales increased $14.2 million (17 percent) to $99.0 million in
Q2 2023 from $84.8 million in Q2 2022. Sales growth was driven by
commercial aerospace, which increased $8.1 million (27 percent) to
$38.2 million in the quarter. In addition, defense aerospace and
Navy also delivered solid sales growth.
- Q2 2023 EBIT increased $4.5 million to $18.8 million from $14.3
million in Q2 2022. Adjusted EBIT increased $5.1 million (35.2
percent) in Q2 2023 to $19.6 million (19.8 percent margin) from
$14.5 million (17.1 percent margin) in Q2 2022.
- Entered Orders increased $17 million (18 percent) to $112
million in Q2 2023 compared to $95 million in Q2 2022.
The orders strength was driven by commercial OEM build rate
increases, market share gains at Mayday, a large aftermarket order
at PTI, and $7 million in acquired backlog related to CMT.
A&D’s book-to-bill of 1.13x in the quarter resulted in record
ending backlog of $435 million.
Utility Solutions Group (USG)
- Sales increased $15.0 million (23 percent) to $79.2 million in
Q2 2023 from $64.2 million in Q2 2022. Doble’s sales increased by
$10.5 million (19 percent) driven by a strong quarter for condition
monitoring products, services, and high voltage test equipment at
Phenix. NRG sales increased $4.5 million (47 percent)
on continued strength in the renewables end-market.
- EBIT increased $2.8 million in Q2 2023 to $14.1 million from
$11.3 million in Q2 2022. There were no adjustments to Q2 2023 EBIT
of $14.1 million (17.8 percent margin), which also increased $2.8
million from Q2 2022 Adjusted EBIT of $11.3 million (17.7 percent
margin). Margins were unfavorably impacted by product mix and
increased event costs as trade show activity continued to normalize
post-COVID.
- Entered Orders decreased $2 million (2 percent) to $85 million
in Q2 2023. The decrease in orders was primarily driven by an $8
million (11 percent) decrease at Doble related to the timing of a
large multi-year DUC contract renewal in the prior year Q2. Order
strength continues across the Doble portfolio, highlighted by
significant condition monitoring orders. NRG orders increased by $6
million (54 percent) related to continuing strength in both wind
and solar, and with significant orders by solar resource monitoring
(SRM) customers in the U.S. and Europe. USG’s book-to-bill of 1.07x
in the quarter resulted in an ending backlog of $143 million, which
is up $26 million compared to prior year.
Test
- Sales decreased $4.9 million (9 percent) to $51.0 million in Q2
2023 from $55.9 million in Q2 2022, with sales increases in Europe
more than offset by declines in the U.S. and Asia. There were
disruptions in test and measurement project execution in China
related to re-opening of the economy after prior zero-COVID
policies.
- EBIT decreased $1.3 million in Q2 2023 to $7.2 million (14.2
percent margin) from $8.5 million (15.2 percent margin) in Q2 2022
related to lower volume in China. There were no adjustments in
either year for the Test segment.
- Entered Orders decreased $0.1 million to $55.3 million in Q2
2023 compared to $55.4 million in Q2 2022. Despite the slight
decrease in orders, it was a solid orders quarter for Test with a
book-to-bill of 1.09x, which resulted in an ending backlog of $163
million.
Share Repurchase ProgramDuring Q2 2023, the
Company repurchased approximately 81,000 shares for $7.1 million.
$8.1 million was paid in the quarter related to the Q2 shares
purchased and included $1.0 million related to December purchases
that settled in January. Year-to-date, the company has repurchased
approximately 138,000 shares for $12.2 million.
Dividend PaymentThe next
quarterly cash dividend of $0.08 per share will be paid on July 19,
2023 to stockholders of record on July 5, 2023.
Business Outlook –
2023 The strength of our first
half results gives us added confidence in our ability to deliver
solid revenue and earnings growth in 2023 and we are again
increasing our earnings guidance. We now expect current year
adjusted EPS in the range of $3.55 to $3.65 (11 to 14 percent
growth). This is based on sales in a range of $930 to $950 million
(8 to 11 percent annual growth). Consistent with prior years,
revenues and Adjusted EPS are expected to grow sequentially
throughout the year. Our expectation is for Q3 Adjusted EPS to be
in the range of $0.96 to $1.01 per share (8 to 13 percent
growth).
Board of DirectorsEffective June 30, 2023, and
consistent with the succession plan previously announced, Vic
Richey will retire from his roles as a director of the Company, the
Executive Chair of the Board, and an employee of the Company.
Related to this change, independent director Robert Phillippy has
been appointed to serve as Chair of the Board. James Stolze will
remain a director but has resigned his position as Lead Director.
In addition, given that the role of Board Chair will be held by an
independent director, the position of Lead Director has been
eliminated by the Board. Patrick Dewar has been appointed to serve
as Chair of the Audit and Finance Committee. All of the
foregoing changes are effective June 30, 2023.
Conference CallThe Company
will host a conference call today, May 9, at 4:00 p.m. Central
Time, to discuss the Company’s Q2 2023 results. A live audio
webcast and an accompanying slide presentation will be available on
ESCO’s investor website at https://investor.escotechnologies.com.
For those unable to participate, a webcast replay will be available
after the call on ESCO’s investor website.
Forward-Looking
StatementsStatements in this press release regarding
Management’s expectations for fiscal 2023, the effects of
continuing inflationary pressures, higher interest rates, pressures
related to supply chain performance and labor shortages, our
guidance for 2023 including revenues, revenue growth, Adjusted EPS,
Adjusted EBIT and Adjusted EBITDA margin; the effects of
acquisitions, and any other statements which are not strictly
historical, are “forward-looking statements” within the meaning of
the safe harbor provisions of the U.S. 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 them except as may be required
by applicable laws or regulations. 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 those described in Item 1A, “Risk
Factors”, of the Company’s Annual Report on Form 10-K for the
fiscal year ended September 30, 2022; the availability and
acceptance of viable COVID-19 vaccines by enough of the U.S. and
world’s population to curtail the pandemic; the continuing impact
of the COVID-19 pandemic and the effects of known or unknown
COVID-19 variants including labor shortages, facility closures,
shelter in place policies or quarantines, material shortages,
transportation delays, termination or delays of Company contracts,
and the inability of our suppliers or customers to perform; the
impacts of natural disasters on the Company’s operations and those
of the Company’s customers and suppliers; the timing and content of
future contract awards or customer orders; the appropriation,
allocation and availability of Government funds; the termination
for convenience of Government and other customer contracts or
orders; weakening of economic conditions in served markets; the
success of the Company’s competitors; changes in customer demands
or customer insolvencies; competition; intellectual property
rights; technical difficulties; the success of the Company’s
acquisition efforts; delivery delays or defaults by customers;
performance issues with key customers, suppliers and
subcontractors; changes in the costs and availability of certain
raw materials; labor disputes; changes in U.S. tax laws and
regulations; other changes in laws and regulations including but
not limited to changes in accounting standards and foreign
taxation; changes in interest rates; costs relating to
environmental matters arising from current or former facilities;
uncertainty regarding the ultimate resolution of current disputes,
claims, litigation or arbitration; and the integration of recently
acquired businesses.
Non-GAAP Financial MeasuresThe financial
measures EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted
EPS are presented in this press release. The Company defines “EBIT”
as earnings before interest and taxes, “EBITDA” as earnings before
interest, taxes, depreciation and amortization, “Adjusted EBIT” and
“Adjusted EBITDA” as excluding the net impact of the items
described in the attached Reconciliation of Non-GAAP Financial
Measures, and “Adjusted EPS” as GAAP earnings per share (EPS)
excluding the net impact of the items described and reconciled in
the attached Reconciliation of Non-GAAP Financial Measures.
EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS
are not recognized in accordance with U.S. generally accepted
accounting principles (GAAP). However, Management believes EBIT,
Adjusted EBIT, EBITDA and Adjusted EBITDA are useful in assessing
the operational profitability of the Company’s business segments
because they exclude interest, taxes, depreciation and
amortization, which are generally accounted for across the entire
Company on a consolidated basis. EBIT and EBITDA are also measures
used by Management in determining resource allocations within the
Company as well as incentive compensation. The presentation of
EBIT, Adjusted EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS
provides important supplemental information to investors by
facilitating comparisons with other companies, many of which use
similar non-GAAP financial measures to supplement their GAAP
results. The use of non-GAAP financial measures is not intended to
replace any measures of performance determined in accordance with
GAAP.
About ESCO TechnologiesESCO is a global
provider of highly engineered products and solutions serving
diverse end-markets. It manufactures filtration and fluid control
products for the aviation, Navy, space, and process markets
worldwide and composite-based products and solutions for Navy,
defense, and industrial customers. ESCO is the industry leader in
RF shielding and EMC test products; and provides diagnostic
instruments, software and services to industrial power users and
the electric utility and renewable energy industries. Headquartered
in St. Louis, Missouri, ESCO and its subsidiaries have offices and
manufacturing facilities worldwide. For more information on ESCO
and its subsidiaries, visit the Company’s website at
www.escotechnologies.com.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Condensed Consolidated Statements of Operations (Unaudited) |
|
(Dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
Three MonthsEnded March 31, 2023 |
|
Three MonthsEndedMarch 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Net Sales |
$ |
229,136 |
|
204,928 |
|
|
Cost and
Expenses: |
|
|
|
|
|
|
Cost of sales |
|
142,296 |
|
128,375 |
|
|
|
Selling, general
and administrative expenses |
|
53,877 |
|
47,959 |
|
|
|
Amortization of
intangible assets |
|
7,030 |
|
6,510 |
|
|
|
Interest
expense |
|
2,269 |
|
1,020 |
|
|
|
Other expenses
(income), net |
|
314 |
|
(604 |
) |
|
|
|
Total costs and
expenses |
|
205,786 |
|
183,260 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
|
23,350 |
|
21,668 |
|
|
Income tax
expense |
|
5,472 |
|
5,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
17,878 |
|
16,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted - GAAP |
$ |
0.69 |
|
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted - As Adjusted
Basis |
$ |
0.76 |
(1 |
) |
0.65 |
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares
O/S: |
|
25,895 |
|
26,045 |
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Q2 2023 Adjusted EPS
excludes $0.07 per share of after-tax charges consisting of $0.04
of executive management transition costs at Corporate, $0.02 of CMT
acquisition inventory step-up charges and $0.01 of restructuring
charges within the A&D segment. |
|
|
|
|
|
|
|
|
|
(2 |
) |
Q2 2022 Adjusted EPS
excludes $0.01 per share of after-tax charges associated with the
NEco acquisition inventory step-up charge and Corporate acquisition
related costs. |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Condensed Consolidated Statements of Operations (Unaudited) |
|
(Dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
Six MonthsEndedMarch 31, 2023 |
|
Six MonthsEndedMarch 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Net Sales |
$ |
434,637 |
|
381,938 |
|
|
Cost and
Expenses: |
|
|
|
|
|
|
Cost of sales |
|
268,679 |
|
236,680 |
|
|
|
Selling, general
and administrative expenses |
|
105,179 |
|
94,594 |
|
|
|
Amortization of
intangible assets |
|
13,891 |
|
12,977 |
|
|
|
Interest
expense |
|
3,927 |
|
1,753 |
|
|
|
Other expenses
(income), net |
|
712 |
|
(571 |
) |
|
|
|
Total costs and
expenses |
|
392,388 |
|
345,433 |
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
|
42,249 |
|
36,505 |
|
|
Income tax
expense |
|
9,644 |
|
8,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
$ |
32,605 |
|
28,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted - GAAP |
$ |
1.26 |
|
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted - As Adjusted
Basis |
$ |
1.36 |
(1 |
) |
1.11 |
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares
O/S: |
|
25,919 |
|
26,098 |
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
YTD Q2 2023 Adjusted
EPS excludes $0.10 per share of after-tax charges consisting of
$0.06 of executive management transition costs at Corporate, $0.02
of CMT acquisition inventory step-up charges and $0.02 of
restructuring charges within the A&D segment. |
|
|
|
|
|
|
|
|
|
(2 |
) |
YTD Q2 2022 Adjusted
EPS excludes $0.03 per share of after-tax charges associated with
the Altanova & NEco acquisition inventory step-up charges and
Corporate acquisition related costs. |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Condensed Business Segment Information (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
GAAP |
|
As Adjusted |
|
|
|
|
|
Q2 2023 |
|
Q2 2022 |
|
Q2 2023 |
|
Q2 2022 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
Aerospace &
Defense |
$ |
98,982 |
|
|
84,821 |
|
|
98,982 |
|
|
84,821 |
|
|
|
USG |
|
79,161 |
|
|
64,191 |
|
|
79,161 |
|
|
64,191 |
|
|
|
Test |
|
50,993 |
|
|
55,916 |
|
|
50,993 |
|
|
55,916 |
|
|
|
|
Totals |
$ |
229,136 |
|
|
204,928 |
|
|
229,136 |
|
|
204,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
|
|
|
|
|
|
Aerospace &
Defense |
$ |
18,795 |
|
|
14,349 |
|
|
19,595 |
|
|
14,489 |
|
|
|
USG |
|
14,061 |
|
|
11,314 |
|
|
14,061 |
|
|
11,331 |
|
|
|
Test |
|
7,226 |
|
|
8,494 |
|
|
7,226 |
|
|
8,494 |
|
|
|
Corporate |
|
(14,463 |
) |
|
(11,469 |
) |
|
(12,963 |
) |
|
(11,344 |
) |
|
|
|
Consolidated EBIT |
|
25,619 |
|
|
22,688 |
|
|
27,919 |
|
|
22,970 |
|
|
|
|
Less: Interest expense |
|
(2,269 |
) |
|
(1,020 |
) |
|
(2,269 |
) |
|
(1,020 |
) |
|
|
|
Less: Income tax
expense |
(5,472 |
) |
|
(5,085 |
) |
|
(6,001 |
) |
|
(5,150 |
) |
|
|
|
Net earnings |
$ |
17,878 |
|
|
16,583 |
|
|
19,649 |
|
|
16,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Adjusted
net earnings were $19.6 million in Q2 2023 which excludes $0.07 per
share of after-tax charges consisting of $0.04 of executive
management transition costs at Corporate, $0.02 of CMT acquisition
inventory step-up charges and $0.01 of restructuring charges within
the A&D segment. |
|
|
|
|
|
|
|
|
|
|
|
|
Note 2: Adjusted
net earnings were $16.8 million in Q2 2022 which excludes $0.01 per
share of after-tax charges associated with the NEco acquisition
inventory step-up charge and Corporate acquisition related
costs. |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Reconciliation to Net earnings: |
|
|
|
Q2 2023 |
|
Q2 2022 |
|
|
|
|
|
Q2 2023 |
|
Q2 2022 |
|
- As Adjusted |
|
- As Adjusted |
|
Consolidated EBITDA |
$ |
38,162 |
|
|
34,808 |
|
|
40,462 |
|
|
35,090 |
|
|
Less:
Depr & Amort |
|
(12,543 |
) |
|
(12,120 |
) |
|
(12,543 |
) |
|
(12,120 |
) |
|
Consolidated EBIT |
|
25,619 |
|
|
22,688 |
|
|
27,919 |
|
|
22,970 |
|
|
Less:
Interest expense |
|
(2,269 |
) |
|
(1,020 |
) |
|
(2,269 |
) |
|
(1,020 |
) |
|
Less:
Income tax expense |
|
(5,472 |
) |
|
(5,085 |
) |
|
(6,001 |
) |
|
(5,150 |
) |
|
Net
earnings |
$ |
17,878 |
|
|
16,583 |
|
|
19,649 |
|
|
16,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Condensed Business Segment Information (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
GAAP |
|
As Adjusted |
|
|
|
|
|
YTD Q2 2023 |
|
YTD Q2 2022 |
|
YTD Q2 2023 |
|
YTD Q2 2022 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
Aerospace &
Defense |
$ |
181,965 |
|
|
155,065 |
|
|
181,965 |
|
|
155,065 |
|
|
|
USG |
|
150,206 |
|
|
127,676 |
|
|
150,206 |
|
|
127,676 |
|
|
|
Test |
|
102,466 |
|
|
99,197 |
|
|
102,466 |
|
|
99,197 |
|
|
|
|
Totals |
$ |
434,637 |
|
|
381,938 |
|
|
434,637 |
|
|
381,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
|
|
|
|
|
|
Aerospace &
Defense |
$ |
31,331 |
|
|
24,304 |
|
|
32,330 |
|
|
24,639 |
|
|
|
USG |
|
30,192 |
|
|
24,705 |
|
|
30,192 |
|
|
25,172 |
|
|
|
Test |
|
12,637 |
|
|
12,459 |
|
|
12,637 |
|
|
12,459 |
|
|
|
Corporate |
|
(27,984 |
) |
|
(23,210 |
) |
|
(25,691 |
) |
|
(22,905 |
) |
|
|
|
Consolidated EBIT |
|
46,176 |
|
|
38,258 |
|
|
49,468 |
|
|
39,365 |
|
|
|
|
Less: Interest expense |
|
(3,927 |
) |
|
(1,753 |
) |
|
(3,927 |
) |
|
(1,753 |
) |
|
|
|
Less: Income tax
expense |
(9,644 |
) |
|
(8,398 |
) |
|
(10,401 |
) |
|
(8,653 |
) |
|
|
|
Net earnings |
$ |
32,605 |
|
|
28,107 |
|
|
35,140 |
|
|
28,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Adjusted
net earnings were $35.1 million in YTD 2023 which excludes $0.10
per share of after-tax charges consisting of $0.06 of executive
management transition costs at Corporate, $0.02 of CMT acquisition
inventory step-up charges and $0.02 of restructuring charges within
the A&D segment. |
|
|
|
|
|
|
|
|
|
|
|
|
Note 2: Adjusted
net earnings were $29.0 million in YTD Q2 2022 which excludes $0.03
per share of after-tax charges associated with the Altanova &
NEco acquisition inventory step-up charges and Corporate
acquisition related costs. |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Reconciliation to Net earnings: |
|
|
|
YTD Q2 2023 |
|
YTD Q2 2022 |
|
|
|
|
|
YTD Q2 2023 |
|
YTD Q2 2022 |
|
- As Adjusted |
|
- As Adjusted |
|
Consolidated EBITDA |
$ |
71,086 |
|
|
62,550 |
|
|
74,378 |
|
|
63,657 |
|
|
Less:
Depr & Amort |
|
(24,910 |
) |
|
(24,292 |
) |
|
(24,910 |
) |
|
(24,292 |
) |
|
Consolidated EBIT |
|
46,176 |
|
|
38,258 |
|
|
49,468 |
|
|
39,365 |
|
|
Less:
Interest expense |
|
(3,927 |
) |
|
(1,753 |
) |
|
(3,927 |
) |
|
(1,753 |
) |
|
Less:
Income tax expense |
|
(9,644 |
) |
|
(8,398 |
) |
|
(10,401 |
) |
|
(8,653 |
) |
|
Net
earnings |
$ |
32,605 |
|
|
28,107 |
|
|
35,140 |
|
|
28,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
March 31,2023 |
|
September 30,2022 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
48,221 |
|
97,724 |
|
Accounts
receivable, net |
|
180,817 |
|
164,645 |
|
Contract
assets |
|
128,205 |
|
125,154 |
|
Inventories |
|
185,753 |
|
162,403 |
|
Other current
assets |
|
27,144 |
|
22,696 |
|
|
Total current assets |
|
570,140 |
|
572,622 |
|
Property, plant
and equipment, net |
|
154,020 |
|
155,973 |
|
Intangible assets,
net |
|
401,717 |
|
394,464 |
|
Goodwill |
|
505,194 |
|
492,709 |
|
Operating lease
assets |
|
41,418 |
|
29,150 |
|
Other assets |
|
10,113 |
|
9,538 |
|
|
|
$ |
1,682,602 |
|
1,654,456 |
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
|
|
Current maturities
of long-term debt |
$ |
20,000 |
|
20,000 |
|
Accounts
payable |
|
79,619 |
|
78,746 |
|
Contract
liabilities |
|
119,970 |
|
125,009 |
|
Other current
liabilities |
|
77,466 |
|
94,374 |
|
|
Total current liabilities |
|
297,055 |
|
318,129 |
|
Deferred tax
liabilities |
|
81,150 |
|
82,023 |
|
Non-current
operating lease liabilities |
|
37,657 |
|
24,853 |
|
Other
liabilities |
|
44,945 |
|
48,294 |
|
Long-term
debt |
|
141,000 |
|
133,000 |
|
Shareholders'
equity |
|
1,080,795 |
|
1,048,157 |
|
|
|
$ |
1,682,602 |
|
1,654,456 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Consolidated Statements of Cash Flows (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
Six MonthsEndedMarch 31, 2023 |
|
Six MonthsEnded March 31, 2022 |
Cash flows from operating
activities: |
|
|
|
|
Net earnings |
$ |
32,605 |
|
|
28,107 |
|
Adjustments to reconcile net
earnings to net cash |
|
|
|
|
(used) provided by operating
activities: |
|
|
|
|
Depreciation and
amortization |
|
24,910 |
|
|
24,292 |
|
Stock compensation expense |
|
5,309 |
|
|
3,428 |
|
Changes in assets and
liabilities |
|
(67,140 |
) |
|
(41,451 |
) |
Effect of deferred taxes |
|
(1,145 |
) |
|
8,627 |
|
Net cash (used) provided by
operating activities |
|
(5,461 |
) |
|
23,003 |
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
Acquisition of business, net of
cash acquired |
|
(17,901 |
) |
|
(15,592 |
) |
Capital expenditures |
|
(10,305 |
) |
|
(20,715 |
) |
Additions to capitalized
software |
|
(5,918 |
) |
|
(4,727 |
) |
Net cash used by investing
activities |
|
(34,124 |
) |
|
(41,034 |
) |
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
Proceeds from long-term debt |
|
68,000 |
|
|
88,000 |
|
Principal payments on long-term
debt and short-term borrowings |
|
(60,000 |
) |
|
(46,000 |
) |
Dividends paid |
|
(4,128 |
) |
|
(4,150 |
) |
Purchases of common stock into
treasury |
|
(12,217 |
) |
|
(17,878 |
) |
Other |
|
(2,374 |
) |
|
(2,719 |
) |
Net cash (used) provided by
financing activities |
|
(10,719 |
) |
|
17,253 |
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents |
|
801 |
|
|
(1,130 |
) |
|
|
|
|
|
Net decrease in cash and cash
equivalents |
|
(49,503 |
) |
|
(1,908 |
) |
Cash and cash equivalents,
beginning of period |
|
97,724 |
|
|
56,232 |
|
Cash and cash equivalents, end of
period |
$ |
48,221 |
|
|
54,324 |
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Other Selected Financial Data (Unaudited) |
(Dollars in thousands) |
|
Backlog And Entered Orders - Q2 2023 |
|
Aerospace & Defense |
|
USG |
|
Test |
|
Total |
|
Beginning Backlog
- 1/1/23 |
$ |
422,551 |
|
|
137,286 |
|
|
158,584 |
|
|
718,421 |
|
|
Entered
Orders |
|
111,677 |
|
|
84,571 |
|
|
55,328 |
|
|
251,576 |
|
|
Sales |
|
|
(98,982 |
) |
|
(79,161 |
) |
|
(50,993 |
) |
|
(229,136 |
) |
|
Ending Backlog -
3/31/23 |
$ |
435,246 |
|
|
142,696 |
|
|
162,919 |
|
|
740,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog And Entered Orders - YTD Q2 2023 |
|
Aerospace & Defense |
|
USG |
|
Test |
|
Total |
|
Beginning Backlog
- 10/1/22 |
$ |
408,269 |
|
|
128,156 |
|
|
158,597 |
|
|
695,022 |
|
|
Entered
Orders |
|
208,942 |
|
|
164,746 |
|
|
106,788 |
|
|
480,476 |
|
|
Sales |
|
|
(181,965 |
) |
|
(150,206 |
) |
|
(102,466 |
) |
|
(434,637 |
) |
|
Ending Backlog -
3/31/23 |
$ |
435,246 |
|
|
142,696 |
|
|
162,919 |
|
|
740,861 |
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Financial Measures (Unaudited) |
|
EPS – Adjusted
Basis Reconciliation – Q2 2023 |
|
|
|
|
|
|
EPS – GAAP Basis – Q2
2023 |
$ |
0.69 |
|
|
|
|
Adjustments (defined
below) |
|
0.07 |
|
|
|
|
EPS – As Adjusted Basis – Q2
2023 |
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
exclude $0.07 per share consisting of executive management
transition costs |
|
at Corporate, CMT
acquisition inventory step-up charges and restructuring charges
within |
|
the A&D segment in the
second quarter of 2023. |
|
|
|
|
|
|
The $0.07 of EPS
adjustments per share consists of $2.3M of pre-tax charges |
|
|
offset by $529K of tax benefit
for net impact of $1,771K. |
|
|
|
|
|
|
|
|
|
|
|
|
EPS – Adjusted
Basis Reconciliation – Q2 2022 |
|
|
|
|
|
|
EPS – GAAP Basis – Q2
2022 |
$ |
0.64 |
|
|
|
|
Adjustments (defined
below) |
|
0.01 |
|
|
|
|
EPS – As Adjusted Basis – Q2
2022 |
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
exclude $0.01 per share consisting of NEco acquisition
inventory |
|
|
step-up charges
and Corporate related acquisition costs in the second quarter of
2022. |
|
The $0.01 of EPS
adjustments per share consists of $282K of pre-tax charges |
|
|
offset by $65K of tax benefit
for net impact of $217K. |
|
|
|
|
|
|
|
|
|
|
|
|
EPS – Adjusted
Basis Reconciliation – YTD Q2 2023 |
|
|
|
|
|
|
EPS – GAAP Basis – YTD Q2
2023 |
$ |
1.26 |
|
|
|
|
Adjustments (defined
below) |
|
0.10 |
|
|
|
|
EPS – As Adjusted Basis – YTD
Q2 2023 |
$ |
1.36 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
exclude $0.10 per share consisting of executive management
transition costs |
|
at Corporate, CMT
acquisition inventory step-up charges and restructuring charges
within |
|
the A&D segment in the
first six months of 2023. |
|
|
|
|
|
|
The $0.10 of EPS
adjustments per share consists of $3,292K of pre-tax charges |
|
offset by $757K of tax benefit
for net impact of $2,535K. |
|
|
|
|
|
|
|
|
|
|
|
|
EPS – Adjusted
Basis Reconciliation – YTD Q2 2022 |
|
|
|
|
|
|
EPS – GAAP Basis – YTD Q2
2022 |
$ |
1.08 |
|
|
|
|
Adjustments (defined
below) |
|
0.03 |
|
|
|
|
EPS – As Adjusted Basis – YTD
Q2 2022 |
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
|
Adjustments
exclude $0.03 per share consisting of Altanova & NEco
acquisition inventory |
|
step-up charges
and Corporate related acquisition costs in the first six months of
2022. |
|
The $0.03 of EPS
adjustments per share consists of $1,107K of pre-tax charges |
|
offset by $255K of tax benefit
for net impact of $852K. |
|
|
|
|
|
SOURCE
ESCO Technologies Inc.Kate Lowrey, Vice President of Investor
Relations, (314) 213-7277
ESCO Technologies (NYSE:ESE)
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