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Esco Technologies Inc, USA
COMPANY PROFILE
Esco Technologies Inc, USA Profile
Esco Technologies Inc produces engineered products and systems for industrial and commercial applications. It operates three business segments: Filtration/Fluid Flow, Utility Solutions, and, RF Shielding and Test. The Filtration/Fluid Flow division currently consists of Vacco Industries, PTI Technologies and TekPackaging. PTI supplies filtration products to the commercial and military aerospace markets and various industrial applications. Vacco supplies flow control, valve and filter products to the space, defence and commercial industries. Analysis
Esco Technologies made solid progress in a difficult global environment in fiscal 2009 with net sales up 1.0% on the year earlier at US$619.1 million, while net earnings were 5.8% stronger at US$49.4 million. Earnings before interest and taxes (EBIT) for the group, however, were down 11.4% at US$63.2 million. In Esco’s Filtration/Fluid Flow segment, net sales in 2009 decreased US$9.4 million or 8.1% compared to the prior year to total US$106.7 million. The sales result stemmed from a US$12.4 million decline in sales at PTI due to lower commercial aerospace shipments and a US$2.1 million decrease in revenues at TekPack resulting from lower demand from commercial customers. These falls were partially offset by a US$5.1 million increase in net sales at Vacco driven by higher military/defence aircraft product shipments. Among the successes during the year was Vacco receiving a US$32.2 million multi-year contract in August 2009 to provide fluid flow products to the US Navy’s Virginia Class submarine. EBIT in the Filtration/Fluid Flow segment fell US$3.1 million, or 14.6%, on the 2008 equivalent to US$18.1 million. The decrease reflected the lower commercial aerospace shipments at PTI and an increase in R&D costs, as well as higher bid and proposal costs at Vacco. Elsewhere in the group, highlights for the year included US$80.0 million in orders and US$106.2 million in sales to Pacific Gas & Electric Co related to its advanced metering infrastructure (AMI) applications and other large AMI orders to New York City and Idaho Power Co. In total, Esco received US$634.0 million in new orders during fiscal 2009, an increase of 73.5% on the year earlier, resulting in a backlog at year-end of US$284.5 million. New orders in the Filtration/Fluid Flow segment totalled US$148.0 million, an uplift of 30.7% on the fiscal 2008 figure.
COMMENT Despite the challenging economic environment in fiscal 2009, Esco Technologies’ diverse end market structure showed considerable resilience during the year. While the company is confident that the outlook for the future is equally positive, it is expecting a downturn during fiscal 2010 due to two main factors. The first of these is that its Utility Solutions division’s large AMI contract with Pacific Gas & Electric will move towards completion with sales dropping from US$98 million in 2009 to US$40 million this year. In addition, the company is anticipating a significant increase in its tax rate from 22% last year to 38% in the current period. These factors appeared evident in the first quarter of fiscal 2010, where Esco recorded sales of US$112.7 million, down 23.5% on the US$147.4 million posted a year earlier. The Filtration/Fluid Flow segment enjoyed a 3.5% lift on sales to US$24.5 million, but as anticipated the Utility Solutions group suffered a decline with its revenues down 30.6% to US$61.2 million. EBIT followed a similar trend with the group total down 80.4% on the year earlier at US$2.2 million. EBIT for the Filtration/Fluid Flow was down 17.6% for the period at US2.4 million. The importance of the AMI contracts to Esco’s performance in fiscal 2009 reflects the focus that the company has placed on its Utility Solutions division in recent years. While the company continues to value the contribution of its Filtration/Fluid Flow and RF Shielding and Test segments, it has concentrated on its Utility Solutions division to deliver growth. ■
Key Figures (US$ million) Esco Technologies Inc
Year ended 30.9 2009
2008
2007
2006
2005
Net Sales Of Which: Filtration/Fluid Flow
619.1
613.6
437.4
374.8
334.3
106.7
116.1
105.6
n/a
n/a
Cost of Sales
372.4
368.0
278.1
n/a
n/a
Gross Profit
246.7
245.6
159.3
n/a
n/a
Total Costs and Expenses
555.9
542.3
398.7
n/a
n/a
Earnings before Interest and Taxes Of Which: Filtration/Fluid Flow
63.2
71.3
38.7
n/a
n/a
18.1
21.2
18.4
n/a
n/a
Net Earnings
49.4
46.7
33.7
31.3
43.5
Contact Details
Chair, CEO and President: Address:
March 2010
Victor L Richey Jr 9900A Clayton Road St Louis MO 63124 USA
Tel: +1 314 213 7200 Fax: +1 314 213 7250 Web: www.escotechnologies.com
Filtration Industry Analyst
7
Esco Technologies Inc, USA Profile
Esco Technologies Inc produces engineered products and systems for industrial and commercial applications. It operates three business segments: Filtration/Fluid Flow, Utility Solutions, and, RF Shielding and Test. The Filtration/Fluid Flow division currently consists of Vacco Industries, PTI Technologies and TekPackaging. PTI supplies filtration products to the commercial and military aerospace markets and various industrial applications. Vacco supplies flow control, valve and filter products to the space, defence and commercial industries. Analysis
Esco Technologies made solid progress in a difficult global environment in fiscal 2009 with net sales up 1.0% on the year earlier at US$619.1 million, while net earnings were 5.8% stronger at US$49.4 million. Earnings before interest and taxes (EBIT) for the group, however, were down 11.4% at US$63.2 million. In Esco’s Filtration/Fluid Flow segment, net sales in 2009 decreased US$9.4 million or 8.1% compared to the prior year to total US$106.7 million. The sales result stemmed from a US$12.4 million decline in sales at PTI due to lower commercial aerospace shipments and a US$2.1 million decrease in revenues at TekPack resulting from lower demand from commercial customers. These falls were partially offset by a US$5.1 million increase in net sales at Vacco driven by higher military/defence aircraft product shipments. Among the successes during the year was Vacco receiving a US$32.2 million multi-year contract in August 2009 to provide fluid flow products to the US Navy’s Virginia Class submarine. EBIT in the Filtration/Fluid Flow segment fell US$3.1 million, or 14.6%, on the 2008 equivalent to US$18.1 million. The decrease reflected the lower commercial aerospace shipments at PTI and an increase in R&D costs, as well as higher bid and proposal costs at Vacco. Elsewhere in the group, highlights for the year included US$80.0 million in orders and US$106.2 million in sales to Pacific Gas & Electric Co related to its advanced metering infrastructure (AMI) applications and other large AMI orders to New York City and Idaho Power Co. In total, Esco received US$634.0 million in new orders during fiscal 2009, an increase of 73.5% on the year earlier, resulting in a backlog at year-end of US$284.5 million. New orders in the Filtration/Fluid Flow segment totalled US$148.0 million, an uplift of 30.7% on the fiscal 2008 figure.
COMMENT Despite the challenging economic environment in fiscal 2009, Esco Technologies’ diverse end market structure showed considerable resilience during the year. While the company is confident that the outlook for the future is equally positive, it is expecting a downturn during fiscal 2010 due to two main factors. The first of these is that its Utility Solutions division’s large AMI contract with Pacific Gas & Electric will move towards completion with sales dropping from US$98 million in 2009 to US$40 million this year. In addition, the company is anticipating a significant increase in its tax rate from 22% last year to 38% in the current period. These factors appeared evident in the first quarter of fiscal 2010, where Esco recorded sales of US$112.7 million, down 23.5% on the US$147.4 million posted a year earlier. The Filtration/Fluid Flow segment enjoyed a 3.5% lift on sales to US$24.5 million, but as anticipated the Utility Solutions group suffered a decline with its revenues down 30.6% to US$61.2 million. EBIT followed a similar trend with the group total down 80.4% on the year earlier at US$2.2 million. EBIT for the Filtration/Fluid Flow was down 17.6% for the period at US2.4 million. The importance of the AMI contracts to Esco’s performance in fiscal 2009 reflects the focus that the company has placed on its Utility Solutions division in recent years. While the company continues to value the contribution of its Filtration/Fluid Flow and RF Shielding and Test segments, it has concentrated on its Utility Solutions division to deliver growth. ■
Key Figures (US$ million) Esco Technologies Inc
Year ended 30.9 2009
2008
2007
2006
2005
Net Sales Of Which: Filtration/Fluid Flow
619.1
613.6
437.4
374.8
334.3
106.7
116.1
105.6
n/a
n/a
Cost of Sales
372.4
368.0
278.1
n/a
n/a
Gross Profit
246.7
245.6
159.3
n/a
n/a
Total Costs and Expenses
555.9
542.3
398.7
n/a
n/a
Earnings before Interest and Taxes Of Which: Filtration/Fluid Flow
63.2
71.3
38.7
n/a
n/a
18.1
21.2
18.4
n/a
n/a
Net Earnings
49.4
46.7
33.7
31.3
43.5
Contact Details
Chair, CEO and President: Address:
March 2010
Victor L Richey Jr 9900A Clayton Road St Louis MO 63124 USA
Tel: +1 314 213 7200 Fax: +1 314 213 7250 Web: www.escotechnologies.com
Filtration Industry Analyst
7