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Esco Technologies Inc, USA
May 2006
Filtration Industry Analyst
Lydall Inc, USA
Esco Technologies Inc, USA Key figures (US$ million) First quarter ended 31.12
2005
2004
Net sales Of which Filtration/separation
77.5
75.9
15.5
20.2
Cost of sales
63.6
62.9
Gross margin
13.9
13.0
0.2
(1.5)
68.5
Operating income/(loss) Of which Filtration/separation
0.1
1.4
3.0
16.5
Net income/(loss)
1.0
(1.2)
2006
2005
Net sales Of which Filtration/fluid flow Of which PTI Vacco Filtertek
90.6
104.4
41.5
44.0
10.7 8.1 22.7
10.2 10.6 23.2
Cost of sales
64.0
Earnings before interest & taxes Of which Filtration/fluid flow Of which PTI Vacco Filtertek
4.1
7.1
1.2 1.9 1.0
1.1 3.6 2.4
Net earnings
2.2
10.5
COMMENT Esco’s net sales decreased 13.2% to US$90.6 million for the first quarter of 2006 compared with the same period of 2005. The decline was primarily due to a decrease in sales in the communications segment of US$14.4 million, while unfavourable foreign currency values resulted in approximately US$1.0 million of the decline. In the company’s filtration/fluid flow division, sales decreased US$2.5 million (5.7%) to US$41.5 million compared with the 2005 quarter. The sales decrease was mainly due to lower shipments of defence spares at Vacco, which saw a dip in income of US$2.5 million, and a net sales decrease at Filtertek of US$0.5 million driven by lower automotive shipments and lower sales in France. The losses were partially offset by higher commercial aerospace shipments
at PTI of US$0.5 million. Total earnings before interest and taxes (EBIT) for the quarter was US$3.0 million (3.3% of net sales), down from US$16.5 million (15.8% of net sales) in 2005. The decrease was primarily due to the sales decrease in the communications segment. In the filtration/fluid flow segment, EBIT was down US$3.0 million to US$4.1 million (9.9% of net sales) compared with 2005. As well as the factors that contributed to the sales decline, the EBIT figure was also impacted by an increase in raw material costs, while Filtertek’s prior year first quarter included US$0.6 million of cost reimbursement related to a supply agreement terminated in fiscal 2005. Esco’s backlog was US$268.7 million at December 31, 2005 compared with US$233.1 million at September 30, 2005. ■
Year ended 31.12 2005
2004
Net sales Of which Filtration/separation
306.5
293.6
68.2
82.1
Cost of sales
242.6
236.1
Gross margin
63.9
57.5
Operating income Of which Filtration/separation
7.7
0.3
4.9
11.0
Net income/(loss)
5.1
(0.5)
COMMENT Lydall has recorded net sales for the fourth quarter and year ended December 31, 2005, of US$77.5 million and US$306.5 million, an increase of 2.1% and 4.4%, respectively, over the comparable periods in the prior year. In the filtration/separation segment, however, net sales decreased by US$4.7 million to US$15.5 million compared with US$20.2 million in the fourth quarter of 2004. Excluding the unfavourable impact of foreign currency translation, segment net sales decreased by US$4.2 million, or 21.0%. Air filtration sales continued to be impacted by the reduction of clean-room
builds in Asia and an increasingly price-competitive environment. Liquid filtration sales increased slightly. Sales of Vital Fluids products were significantly lower in 2005 than in the same period in 2004. Operating income for the segment decreased by US$1.3 million for the quarter compared with the same quarter in 2004. A major portion of the decrease was attributable to lower sales of air filtration products and resultant higher per-unit manufacturing costs. Also, the vital fluids business recorded a greater operating loss for the fourth quarter of 2005 compared with the same quarter of 2004. ■
13
COMPANY WATCH
Key figures (US$ million) Fourth quarter ended 31.12
Filtration Industry Analyst
Lydall Inc, USA
Esco Technologies Inc, USA Key figures (US$ million) First quarter ended 31.12
2005
2004
Net sales Of which Filtration/separation
77.5
75.9
15.5
20.2
Cost of sales
63.6
62.9
Gross margin
13.9
13.0
0.2
(1.5)
68.5
Operating income/(loss) Of which Filtration/separation
0.1
1.4
3.0
16.5
Net income/(loss)
1.0
(1.2)
2006
2005
Net sales Of which Filtration/fluid flow Of which PTI Vacco Filtertek
90.6
104.4
41.5
44.0
10.7 8.1 22.7
10.2 10.6 23.2
Cost of sales
64.0
Earnings before interest & taxes Of which Filtration/fluid flow Of which PTI Vacco Filtertek
4.1
7.1
1.2 1.9 1.0
1.1 3.6 2.4
Net earnings
2.2
10.5
COMMENT Esco’s net sales decreased 13.2% to US$90.6 million for the first quarter of 2006 compared with the same period of 2005. The decline was primarily due to a decrease in sales in the communications segment of US$14.4 million, while unfavourable foreign currency values resulted in approximately US$1.0 million of the decline. In the company’s filtration/fluid flow division, sales decreased US$2.5 million (5.7%) to US$41.5 million compared with the 2005 quarter. The sales decrease was mainly due to lower shipments of defence spares at Vacco, which saw a dip in income of US$2.5 million, and a net sales decrease at Filtertek of US$0.5 million driven by lower automotive shipments and lower sales in France. The losses were partially offset by higher commercial aerospace shipments
at PTI of US$0.5 million. Total earnings before interest and taxes (EBIT) for the quarter was US$3.0 million (3.3% of net sales), down from US$16.5 million (15.8% of net sales) in 2005. The decrease was primarily due to the sales decrease in the communications segment. In the filtration/fluid flow segment, EBIT was down US$3.0 million to US$4.1 million (9.9% of net sales) compared with 2005. As well as the factors that contributed to the sales decline, the EBIT figure was also impacted by an increase in raw material costs, while Filtertek’s prior year first quarter included US$0.6 million of cost reimbursement related to a supply agreement terminated in fiscal 2005. Esco’s backlog was US$268.7 million at December 31, 2005 compared with US$233.1 million at September 30, 2005. ■
Year ended 31.12 2005
2004
Net sales Of which Filtration/separation
306.5
293.6
68.2
82.1
Cost of sales
242.6
236.1
Gross margin
63.9
57.5
Operating income Of which Filtration/separation
7.7
0.3
4.9
11.0
Net income/(loss)
5.1
(0.5)
COMMENT Lydall has recorded net sales for the fourth quarter and year ended December 31, 2005, of US$77.5 million and US$306.5 million, an increase of 2.1% and 4.4%, respectively, over the comparable periods in the prior year. In the filtration/separation segment, however, net sales decreased by US$4.7 million to US$15.5 million compared with US$20.2 million in the fourth quarter of 2004. Excluding the unfavourable impact of foreign currency translation, segment net sales decreased by US$4.2 million, or 21.0%. Air filtration sales continued to be impacted by the reduction of clean-room
builds in Asia and an increasingly price-competitive environment. Liquid filtration sales increased slightly. Sales of Vital Fluids products were significantly lower in 2005 than in the same period in 2004. Operating income for the segment decreased by US$1.3 million for the quarter compared with the same quarter in 2004. A major portion of the decrease was attributable to lower sales of air filtration products and resultant higher per-unit manufacturing costs. Also, the vital fluids business recorded a greater operating loss for the fourth quarter of 2005 compared with the same quarter of 2004. ■
13
COMPANY WATCH
Key figures (US$ million) Fourth quarter ended 31.12