ESCO Technologies Inc. (NYSE: ESE) (ESCO, or the Company) today
reported its operating results for the fourth quarter (Q4 2023) and
fiscal year (FY 2023) ended September 30, 2023.
Operating Highlights
- Q4 2023 sales increased $16 million (6 percent) to $273 million
compared to $257 million in Q4 2022. Organic sales increased $13
million (5 percent) and the CMT acquisition added $3 million (1
percent) of revenue growth in the quarter.
- FY 2023 sales increased $99 million (11 percent) to $956
million. Organic sales increased $89 million (10 percent) and the
CMT acquisition added $10 million (1 percent) of revenue growth for
the full year.
- Q4 2023 entered orders increased $95 million (39 percent)
compared to the prior year period to $340 million (book-to-bill of
1.25x). Full year 2023 entered orders increased $73 million (8
percent) to $1.0 billion (book-to-bill of 1.08x) and resulted in
record year-end backlog of $772 million.
- Q4 2023 GAAP EPS increased $0.05 per share (4 percent) to $1.24
per share compared to $1.19 per share in Q4 2022. Q4 2023 Adjusted
EPS increased $0.04 per share (3 percent) to $1.25 per share
compared to $1.21 per share in Q4 2022.
- FY 2023 GAAP EPS increased $0.42 per share (13 percent) to
$3.58 per share compared to $3.16 per share in FY 2022. FY 2023
Adjusted EPS increased $0.49 per share (15 percent) to $3.70 per
share compared to $3.21 per share in FY 2022.
- Net cash provided by operating activities was $48 million in Q4
and $77 million for the full year, resulting in a decrease of $58
million compared to the prior year. Cash flow improved
significantly in Q4 but was negatively impacted during the year by
higher working capital requirements, along with higher interest and
tax payments compared to the prior year.
- Net debt (total borrowings less cash on hand) was $60 million,
resulting in a leverage ratio of 0.54x and $640 million in
available liquidity on September 30, 2023.
Bryan Sayler, Chief Executive Officer and President, commented,
“ESCO had a great year, as we delivered record sales, Adjusted
EBIT, Adjusted EPS, entered orders, and year-end
backlog. We are well positioned in a number of
end-markets with excellent growth characteristics, and we continue
to see orders and sales momentum across our portfolio.
In the quarter, all three business segments reported solid orders
growth that resulted in an overall book-to-bill of
1.25x. A highlight in the quarter was booking over $90
million in Navy orders, which included significant content for
machining of Block V hull treatments on Virginia Class submarines,
hypersonic ejection valves, and Navy spares. Record quarterly
orders of $340 million capped off a year in which we surpassed $1
billion dollars in orders for the first time.
“This was a particularly strong quarter for our USG segment as
the need to update and maintain the aging U.S. electric grid, while
at the same time expanding it to support the clean energy
transition, is driving investments in utility infrastructure. USG
sales increased 22 percent in the quarter, and we leveraged that
growth to drive 2 points of margin expansion.
“I would like to thank our team for all their hard work during
the year. The dedication of our employees is a key factor in being
able to deliver record results once again. Across the company there
is a lot to be excited about, both in our FY’23 results and in our
opportunities to drive growth going forward.”
Segment PerformanceAerospace & Defense
(A&D)
- Q4 2023 sales increased $3 million (3 percent) to $107 million
from $104 million in Q4 2022. Q4 organic sales were flat compared
to the prior year as commercial and defense aerospace sales growth
was offset by lower space revenue. The CMT acquisition contributed
$3 million (3 percent) in the quarter. FY 2023 sales increased $41
million (12 percent) to $392 million. Organic sales increased $31
million (9 percent), driven by commercial aerospace which increased
$24 million and defense aerospace which increased $17 million,
partially offset by space which decreased $10 million. The CMT
acquisition added $10 million (3 percent) revenue growth in FY
2023.
- Q4 2023 EBIT decreased $4.7 million to $18.6 million from $23.3
million in Q4 2022. Adjusted EBIT decreased $4.5 million in Q4 2023
to $19.1 million (17.8 percent margin) from $23.6 million (22.7
percent margin) in Q4 2022. FY 2023 EBIT increased $3.2 million to
$71.6 million from $68.4 million in FY 2022. FY 2023 Adjusted EBIT
increased $4.1 million to $73.1 million (18.6 percent margin) from
$69.0 million (19.6 percent margin) in FY 2022. Margin erosion on
certain space development contracts offset leverage on aerospace
growth in both the quarter and the year.
- Entered orders increased $80 million (82 percent) to $177
million in Q4 2023 (book-to-bill of 1.66). For the full year
entered orders increased $76 million (19 percent) to $468 million
(book-to-bill of 1.19). Growth in the quarter and the year was
driven by defense and commercial aerospace and large Navy orders
and resulted in record year-end backlog of $484 million.
Utility Solutions Group (USG)
- Q4 2023 sales increased $19 million (22 percent) to $102
million from $83 million in Q4 2022. Doble sales increased $11
million (15 percent), primarily driven by a strong quarter for
protection testing hardware and software. NRG sales increased $8
million (69 percent) in the quarter as a result of continued robust
demand across all product lines. FY 2023 sales increased $64
million (23 percent) to $342 million from $278 million in FY 2022.
Doble sales increased $42 million (18 percent) and NRG sales
increased $22 million (52 percent) for the year. The sales growth
was driven by condition monitoring and protection testing sales at
Doble and strong demand across our renewables product lines at
NRG.
- Q4 2023 EBIT and Adjusted EBIT both increased $6.4 million in
Q4 2023 to $26.2 million (25.7 percent margin) from $19.8 million
(23.7 percent margin) in Q4 2022. FY 2023 EBIT increased $19.1
million to $76.7 million from $57.6 million in FY 2022. FY 2023
Adjusted EBIT increased $18.8 million to $76.9 million (22.5
percent margin) from $58.1 million (20.9 percent margin) in FY
2022. Adjusted EBIT increases for the quarter and year were largely
driven by higher volumes and price increases, partially offset by
inflationary pressures, and higher commissions related to increased
sales.
- Entered Orders increased $10 million to $97 million in Q4 2023
as Doble orders increased $14 million and NRG orders decreased $4
million compared to the prior year quarter. For the full year
entered orders increased $33 million to $348 million (book-to-bill
of 1.02) and resulted in year-end backlog of $133 million. For the
year, Doble orders increased $18 million (7 percent) on increased
electric utility spending and NRG orders increased $15 million (28
percent) due to continued growth in the demand for renewables and
the initial impact of the Inflation Reduction Act.
RF Test & Measurement (Test)
- Q4 2023 sales decreased $6 million (8 percent) to $63 million
from $69 million in Q4 2022. FY 2023 sales decreased $6 million (3
percent) to $221 million. The primary drivers in both the quarter
and year were lower domestic filter sales and test and measurement
volume in China, partially offset by increased domestic service
revenue and test and measurement activity in EMEA.
- Q4 2023 EBIT decreased $0.7 million to $11.1 million (17.5
percent margin) from $11.8 million (17.0 percent margin) in Q4
2022. FY 2023 EBIT decreased $0.2 million to $32.4 million (14.6
percent margin) from $32.6 million (14.3 percent margin) in FY
2022. The Q4 and full year margin percentage
improvement was driven by price increases and cost reduction
efforts, which more than offset the impact of lower volume and wage
and material cost inflation.
- Entered orders increased $5 million to $65 million in Q4 2023.
Q4 was the highest orders quarter of the year for Test and included
bookings for large utility shielding and anechoic chamber projects.
For the full year entered orders decreased $36 million to $218
million (book-to-bill of 0.98). The decrease in orders for the year
was primarily driven by lower domestic power filter orders and test
and measurement projects in China and resulted in year-end backlog
of $155 million.
Share Repurchase ProgramThe Company did not
repurchase any shares of stock during Q4 2023. During FY 2023 the
Company repurchased approximately 140,000 shares for $12
million.
Dividend PaymentThe next quarterly cash
dividend of $0.08 per share will be paid on January 19, 2024 to
stockholders of record on January 4, 2024.
2024 Annual MeetingThe 2024 Annual Meeting of
the Company’s Shareholders will be held on February 7, 2024.
Acquisition UpdateOn November 9, 2023, the
Company acquired MPE Limited (MPE), based in the United Kingdom.
MPE is a leading global manufacturer of high-performance EMC/EMP
filters and capacitor products for military, utility,
telecommunication, and other critical infrastructure applications.
MPE’s facility and component filter product offerings are highly
complementary to ETS-Lindgren’s powerline filter business and will
broaden our end-markets served and expand our reach
internationally. The business is expected to have annualized sales
in the range of $12 to $14 million and will become part of our RF
Test & Measurement segment. We expect MPE to be accretive to
the sales growth and EBITDA margin profile of our existing Test
segment.
Business Outlook – FY 2024 Management expects
growth in sales, Adjusted EBIT, and Adjusted EBITDA across each of
the Company’s business segments in 2024.
Management’s expectations for growth in 2024 compared to
2023:
- Net sales are expected to grow 7 to 9 percent and be in the
range of $1.02 to $1.04 billion on a consolidated basis, with
A&D growing 8 to 10 percent, USG growing 6 to 8 percent, and
Test growing 8 to 10 percent (including the MPE acquisition).
- Adjusted EBIT is expected to increase approximately 12 to 15
percent with Adjusted EBIT margins increasing to 14.3 to 14.7
percent of sales.
- Adjusted EBITDA is expected to increase approximately 10 to 12
percent with Adjusted EBITDA margins increasing to 19.4 to 19.8
percent of sales.
- The effective income tax rate is expected to be in the range of
22.5 to 23.5 percent in 2024.
- Adjusted EPS to expected to increase 11 to 16 percent and be in
the range of $4.10 to $4.30 per share.
- Management expects Q1 2024 Adjusted EPS to increase 7 to 17
percent compared to the prior year first quarter and to be in the
range of $0.64 - $0.70 per share. Consistent with prior years,
revenues and Adjusted EPS are expected to grow sequentially
throughout the year.
Conference CallThe Company will host a
conference call today, November 16, at 4:00 p.m. Central Time, to
discuss the Company’s Q4 and full year 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 expectations for future results, sales and
sales growth, EPS, Adjusted EBIT, Adjusted EBITDA, Adjusted EPS,
cash flow, results of cost reduction efforts, margins, income tax
rates, the financial success of the Company, the strength of its
end markets, the outlook for the A&D, Test and USG segments,
the ability to increase shareholder value, the results of
acquisitions and international expansion efforts, internal
investments in new products and solutions, the impacts of
inflation, the long-term success of the Company, and any other
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 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 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; future impacts of the Inflation
Reduction Act and other existing and future laws and regulations,
future levels of utility infrastructure spending and demand for
renewables products; the appropriation, allocation and availability
of Government funds; the termination for convenience of Government
and other customer contracts or orders; changing economic
conditions in served markets; changes in customer demands or
customer insolvencies; competition; intellectual property rights;
technical difficulties; the success of the Company’s acquisition
and cost reduction 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 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 is also one of the 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.
ESCO 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 an
industry leader in designing and manufacturing RF test and
measurement products and systems; 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 September30, 2023 |
|
Three MonthsEnded September30, 2022 |
|
| |
|
|
|
|
|
|
|
|
| Net Sales |
$ |
272,647 |
|
256,498 |
|
| Cost and
Expenses: |
|
|
|
|
|
| |
Cost of sales |
|
164,424 |
|
154,323 |
|
| |
Selling, general
and administrative expenses |
|
56,555 |
|
53,054 |
|
| |
Amortization of
intangible assets |
|
7,930 |
|
6,553 |
|
| |
Interest
expense |
|
2,347 |
|
1,767 |
|
| |
Other expenses
(income), net |
|
199 |
|
373 |
|
| |
|
Total costs and
expenses |
|
231,455 |
|
216,070 |
|
| |
|
|
|
|
|
|
|
|
| Earnings before
income taxes |
|
41,192 |
|
40,428 |
|
| Income tax
expense |
|
9,195 |
|
9,388 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Net earnings |
$ |
31,997 |
|
31,040 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
Earnings Per Share (EPS) |
|
|
|
|
|
| |
|
|
Diluted - GAAP |
$ |
1.24 |
|
1.19 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted - As Adjusted
Basis |
$ |
1.25 |
(1 |
) |
1.21 |
(2 |
) |
|
|
|
|
|
|
|
|
|
|
| |
|
|
Diluted average common shares
O/S: |
|
25,862 |
|
25,990 |
|
| |
|
|
|
|
|
|
|
|
|
(1 |
) |
Q4 2023 Adjusted EPS
excludes $0.01 per share of after-tax restructuring charges
primarily at Westland (severance and asset write-off). |
| |
|
|
|
|
|
|
|
|
|
(2 |
) |
Q4 2022 Adjusted EPS
excludes $0.02 per share of after-tax severance charges at VACCO
and NRG, and Corporate management transition costs. |
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
|
Condensed Consolidated Statements of Operations (Unaudited) |
|
|
(Dollars in thousands, except per share amounts) |
|
|
|
|
| |
|
|
|
|
Year Ended September 30,2023 |
|
Year EndedSeptember 30,2022 |
|
| |
|
|
|
|
|
|
|
|
| Net Sales |
$ |
956,033 |
|
857,502 |
|
|
| Cost and
Expenses: |
|
|
|
|
|
| |
Cost of sales |
|
580,377 |
|
525,457 |
|
|
| |
Selling, general
and administrative expenses |
|
217,110 |
|
195,127 |
|
|
| |
Amortization of
intangible assets |
|
28,953 |
|
25,936 |
|
|
| |
Interest
expense |
|
8,769 |
|
4,851 |
|
|
| |
Other expenses
(income), net |
|
1,877 |
|
(304 |
) |
|
| |
|
Total costs and
expenses |
|
837,086 |
|
751,067 |
|
|
| |
|
|
|
|
|
|
|
|
| Earnings before
income taxes |
|
118,947 |
|
106,435 |
|
|
| Income tax
expense |
|
26,402 |
|
24,115 |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Net earnings |
$ |
92,545 |
|
82,320 |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
Earnings Per Share (EPS) |
|
|
|
|
|
| |
|
|
Diluted - GAAP |
$ |
3.58 |
|
3.16 |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
Diluted - As Adjusted
Basis |
$ |
3.70 |
(1 |
) |
3.21 |
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
| |
|
|
Diluted average common shares
O/S: |
|
25,879 |
|
26,067 |
|
|
| |
|
|
|
|
|
|
|
|
|
(1 |
) |
FY 2023 Adjusted EPS
excludes $0.12 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, $0.03 of restructuring
charges within the A&D segment, and $0.01 of Corporate
acquisition related costs. |
| |
|
|
|
|
|
|
|
|
|
(2 |
) |
FY 2022 Adjusted EPS
excludes $0.05 per share of after-tax charges associated with the
Altanova & NEco acquisition inventory step-up charges,
severance charges at VACCO and NRG, and Corporate acquisition and
management transition costs. |
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Condensed Business Segment Information (Unaudited) |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
GAAP |
|
As Adjusted |
|
| |
|
|
|
Q4 2023 |
|
Q4 2022 |
|
Q4 2023 |
|
Q4 2022 |
|
| Net Sales |
|
|
|
|
|
|
|
|
|
| |
Aerospace &
Defense |
$ |
107,009 |
|
|
103,742 |
|
|
107,009 |
|
|
103,742 |
|
|
| |
USG |
|
102,148 |
|
|
83,490 |
|
|
102,148 |
|
|
83,490 |
|
|
| |
Test |
|
63,490 |
|
|
69,266 |
|
|
63,490 |
|
|
69,266 |
|
|
| |
|
Totals |
$ |
272,647 |
|
|
256,498 |
|
|
272,647 |
|
|
256,498 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| EBIT |
|
|
|
|
|
|
|
|
|
|
| |
Aerospace &
Defense |
$ |
18,647 |
|
|
23,310 |
|
|
19,075 |
|
|
23,590 |
|
|
| |
USG |
|
26,179 |
|
|
19,764 |
|
|
26,242 |
|
|
19,813 |
|
|
| |
Test |
|
11,115 |
|
|
11,779 |
|
|
11,115 |
|
|
11,779 |
|
|
| |
Corporate |
|
(12,402 |
) |
|
(12,658 |
) |
|
(12,402 |
) |
|
(12,428 |
) |
|
| |
|
Consolidated EBIT |
|
43,539 |
|
|
42,195 |
|
|
44,030 |
|
|
42,754 |
|
|
| |
|
Less: Interest expense |
|
(2,347 |
) |
|
(1,767 |
) |
|
(2,347 |
) |
|
(1,767 |
) |
|
| |
|
Less: Income tax expense |
|
(9,195 |
) |
|
(9,388 |
) |
|
(9,308 |
) |
|
(9,517 |
) |
|
| |
|
Net earnings |
$ |
31,997 |
|
|
31,040 |
|
|
32,375 |
|
|
31,470 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Note 1: Adjusted
net earnings of $32.4 million in Q4 2023 exclude $0.4 million (or
$0.01 per share) of after-tax restructuring charges primarily at
Westland (severance and asset write-off). |
| |
|
|
|
|
|
|
|
|
|
|
|
| Note 2: Adjusted net
earnings of $31.5 million in Q4 2022 exclude $0.4 million (or $0.02
per share) of after-tax severance charges at VACCO and NRG, and
Corporate management transition costs. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Reconciliation to Net earnings: |
|
|
|
Q4 2023 |
|
Q4 2022 |
|
|
|
|
|
|
Q4 2023 |
|
Q4 2022 |
|
As Adjusted |
|
As Adjusted |
|
|
Consolidated EBITDA |
$ |
56,363 |
|
|
54,291 |
|
|
56,854 |
|
|
54,850 |
|
|
| Less:
Depr & Amort |
|
(12,824 |
) |
|
(12,096 |
) |
|
(12,824 |
) |
|
(12,096 |
) |
|
|
Consolidated EBIT |
|
43,539 |
|
|
42,195 |
|
|
44,030 |
|
|
42,754 |
|
|
| Less:
Interest expense |
|
(2,347 |
) |
|
(1,767 |
) |
|
(2,347 |
) |
|
(1,767 |
) |
|
| Less:
Income tax expense |
|
(9,195 |
) |
|
(9,388 |
) |
|
(9,308 |
) |
|
(9,517 |
) |
|
| Net
earnings |
$ |
31,997 |
|
|
31,040 |
|
|
32,375 |
|
|
31,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Condensed Business Segment Information (Unaudited) |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
GAAP |
|
As Adjusted |
|
| |
|
|
|
FY 2023 |
|
FY 2022 |
|
FY 2023 |
|
FY 2022 |
|
| Net Sales |
|
|
|
|
|
|
|
|
|
| |
Aerospace &
Defense |
$ |
392,443 |
|
|
351,413 |
|
|
392,443 |
|
|
351,413 |
|
|
| |
USG |
|
342,320 |
|
|
278,367 |
|
|
342,320 |
|
|
278,367 |
|
|
| |
Test |
|
221,270 |
|
|
227,722 |
|
|
221,270 |
|
|
227,722 |
|
|
| |
|
Totals |
$ |
956,033 |
|
|
857,502 |
|
|
956,033 |
|
|
857,502 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| EBIT |
|
|
|
|
|
|
|
|
|
|
| |
Aerospace &
Defense |
$ |
71,643 |
|
|
68,352 |
|
|
73,070 |
|
|
68,967 |
|
|
| |
USG |
|
76,722 |
|
|
57,604 |
|
|
76,915 |
|
|
58,120 |
|
|
| |
Test |
|
32,395 |
|
|
32,592 |
|
|
32,395 |
|
|
32,592 |
|
|
| |
Corporate |
|
(53,044 |
) |
|
(47,262 |
) |
|
(50,531 |
) |
|
(46,727 |
) |
|
| |
|
Consolidated EBIT |
|
127,716 |
|
|
111,286 |
|
|
131,849 |
|
|
112,952 |
|
|
| |
|
Less: Interest expense |
|
(8,769 |
) |
|
(4,851 |
) |
|
(8,769 |
) |
|
(4,851 |
) |
|
| |
|
Less: Income tax |
|
(26,402 |
) |
|
(24,115 |
) |
|
(27,353 |
) |
|
(24,499 |
) |
|
| |
|
Net earnings |
$ |
92,545 |
|
|
82,320 |
|
|
95,727 |
|
|
83,602 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Note 1: Adjusted
net earnings of $95.7 million in FY 2023 exclude $3.2 million (or
$0.12 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, $0.03 of restructuring
charges within the A&D segment, and $0.01 of Corporate
acquisition related costs. |
| |
|
|
|
|
|
|
|
|
|
|
|
| Note 2: Adjusted
net earnings of $83.6 million in FY 2022 exclude $1.3 million (or
$0.05 per share) of after-tax charges associated with the Altanova
& NEco acquisition inventory step-up charges, severance charges
at VACCO and NRG, and Corporate acquisition and management
transition costs. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA Reconciliation to Net earnings: |
|
|
|
FY 2023 |
|
FY 2022 |
|
|
|
|
|
|
FY 2023 |
|
FY 2022 |
|
As Adjusted |
|
As Adjusted |
|
|
Consolidated EBITDA |
$ |
178,239 |
|
|
159,629 |
|
|
182,372 |
|
|
161,295 |
|
|
| Less:
Depr & Amort |
|
(50,523 |
) |
|
(48,343 |
) |
|
(50,523 |
) |
|
(48,343 |
) |
|
|
Consolidated EBIT |
|
127,716 |
|
|
111,286 |
|
|
131,849 |
|
|
112,952 |
|
|
| Less:
Interest expense |
|
(8,769 |
) |
|
(4,851 |
) |
|
(8,769 |
) |
|
(4,851 |
) |
|
| Less:
Income tax expense |
|
(26,402 |
) |
|
(24,115 |
) |
|
(27,353 |
) |
|
(24,499 |
) |
|
| Net
earnings |
$ |
92,545 |
|
|
82,320 |
|
|
95,727 |
|
|
83,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Condensed Consolidated Balance Sheets (Unaudited) |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
September 30,2023 |
|
September 30,2022 |
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
| |
Cash and cash
equivalents |
$ |
41,866 |
|
97,724 |
|
|
Accounts
receivable, net |
|
198,557 |
|
164,645 |
|
|
Contract
assets |
|
138,633 |
|
125,154 |
|
|
Inventories |
|
184,067 |
|
162,403 |
|
|
Other current
assets |
|
17,972 |
|
22,696 |
|
|
|
Total current assets |
|
581,095 |
|
572,622 |
|
|
Property, plant
and equipment, net |
|
155,484 |
|
155,973 |
|
|
Intangible assets,
net |
|
392,124 |
|
394,464 |
|
|
Goodwill |
|
503,177 |
|
492,709 |
|
|
Operating lease
assets |
|
39,839 |
|
29,150 |
|
|
Other assets |
|
11,495 |
|
9,538 |
|
|
|
|
$ |
1,683,214 |
|
1,654,456 |
|
|
|
|
|
|
|
|
| Liabilities and
Shareholders' Equity |
|
|
|
|
| |
Current maturities
of long-term debt |
$ |
20,000 |
|
20,000 |
|
|
Accounts
payable |
|
86,973 |
|
78,746 |
|
|
Contract
liabilities |
|
112,277 |
|
125,009 |
|
|
Other current
liabilities |
|
95,401 |
|
94,374 |
|
|
|
Total current liabilities |
|
314,651 |
|
318,129 |
|
|
Deferred tax
liabilities |
|
75,531 |
|
82,023 |
|
|
Non-current
operating lease liabilities |
|
36,554 |
|
24,853 |
|
|
Other
liabilities |
|
43,336 |
|
48,294 |
|
|
Long-term
debt |
|
82,000 |
|
133,000 |
|
|
Shareholders'
equity |
|
1,131,142 |
|
1,048,157 |
|
|
|
|
$ |
1,683,214 |
|
1,654,456 |
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Consolidated Statements of Cash Flows |
|
(Dollars in thousands) |
|
|
|
|
| |
|
Year Ended September 30, 2023 |
|
Year Ended September 30, 2022 |
| Cash flows from operating
activities: |
|
|
|
|
| Net earnings |
$ |
92,545 |
|
|
82,320 |
|
| Adjustments to reconcile net
earnings to net cash |
|
|
|
|
| provided by operating
activities: |
|
|
|
|
| Depreciation and
amortization |
|
50,523 |
|
|
48,343 |
|
| Stock compensation expense |
|
8,910 |
|
|
7,320 |
|
| Changes in assets and
liabilities |
|
(68,821 |
) |
|
(11,654 |
) |
| Effect of deferred taxes |
|
(6,267 |
) |
|
8,946 |
|
| Net cash provided by operating
activities |
|
76,890 |
|
|
135,275 |
|
|
|
|
|
|
|
| Cash flows from investing
activities: |
|
|
|
|
| Acquisition of business, net of
cash acquired |
|
(17,694 |
) |
|
(10,906 |
) |
| Capital expenditures |
|
(22,377 |
) |
|
(32,101 |
) |
| Additions to capitalized
software |
|
(12,397 |
) |
|
(12,912 |
) |
| Net cash used by investing
activities |
|
(52,468 |
) |
|
(55,919 |
) |
|
|
|
|
|
|
| Cash flows from financing
activities: |
|
|
|
|
| Proceeds from long-term debt |
|
103,000 |
|
|
100,000 |
|
| Principal payments on long-term
debt & short-term borrowings |
|
(154,000 |
) |
|
(101,000 |
) |
| Dividends paid |
|
(8,252 |
) |
|
(8,268 |
) |
| Purchases of common stock into
treasury |
|
(12,401 |
) |
|
(19,878 |
) |
| Debt issuance costs |
|
(1,826 |
) |
|
0 |
|
| Other |
|
(4,851 |
) |
|
(2,976 |
) |
| Net cash used by financing
activities |
|
(78,330 |
) |
|
(32,122 |
) |
|
|
|
|
|
|
| Effect of exchange rate changes
on cash and cash equivalents |
|
(1,950 |
) |
|
(5,742 |
) |
|
|
|
|
|
|
| Net (decrease) increase in cash
and cash equivalents |
|
(55,858 |
) |
|
41,492 |
|
| Cash and cash equivalents,
beginning of period |
|
97,724 |
|
|
56,232 |
|
| Cash and cash equivalents, end of
period |
$ |
41,866 |
|
|
97,724 |
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Other Selected Financial Data (Unaudited) |
|
(Dollars in thousands) |
|
|
|
Backlog And Entered Orders - Q4 2023 |
|
Aerospace & Defense |
|
USG |
|
Test |
|
Total |
|
|
Beginning Backlog
- 7/1/23 |
$ |
413,713 |
|
|
138,240 |
|
|
153,456 |
|
|
705,409 |
|
|
|
Entered
Orders |
|
177,365 |
|
|
97,367 |
|
|
64,868 |
|
|
339,600 |
|
|
|
Sales |
|
|
(107,009 |
) |
|
(102,148 |
) |
|
(63,490 |
) |
|
(272,647 |
) |
|
|
Ending Backlog -
9/30/23 |
$ |
484,069 |
|
|
133,459 |
|
|
154,834 |
|
|
772,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog And Entered Orders - FY 2023 |
|
Aerospace & Defense |
|
USG |
|
Test |
|
Total |
|
|
Beginning Backlog
- 10/1/22 |
$ |
408,269 |
|
|
128,156 |
|
|
158,597 |
|
|
695,022 |
|
|
|
Entered
Orders |
|
468,243 |
|
|
347,623 |
|
|
217,507 |
|
|
1,033,373 |
|
|
|
Sales |
|
|
(392,443 |
) |
|
(342,320 |
) |
|
(221,270 |
) |
|
(956,033 |
) |
|
|
Ending Backlog -
9/30/23 |
$ |
484,069 |
|
|
133,459 |
|
|
154,834 |
|
|
772,362 |
|
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES |
|
Reconciliation of Non-GAAP Financial Measures (Unaudited) |
|
|
| EPS – Adjusted
Basis Reconciliation – Q4 2023 |
|
|
| |
EPS – GAAP Basis – Q4
2022 |
$ |
1.24 |
|
|
Adjustments (defined
below) |
|
0.01 |
|
|
EPS – As Adjusted Basis – Q4
2023 |
$ |
1.25 |
|
|
|
|
|
| |
Adjustments exclude $0.01 per
share consisting of after-tax restructuring |
|
|
| |
charges primarily at Westland
(severance and asset write-off). |
|
|
| |
The $0.01 of EPS
adjustments per share consists of $0.5 million of pre-tax
charges |
| |
offset by $0.1 million of tax
benefit for net impact of $0.4 million. |
|
|
| |
|
|
|
| EPS – Adjusted
Basis Reconciliation – FY 2023 |
|
|
| |
EPS – GAAP Basis – FY
2023 |
$ |
3.58 |
|
|
Adjustments (defined
below) |
|
0.12 |
|
|
EPS – As Adjusted Basis – FY
2023 |
$ |
3.70 |
|
|
|
|
|
| |
Adjustments
exclude $0.12 per share of after-tax charges consisting of
executive |
|
| |
management
transition costs at Corporate, CMT acquisition inventory step-up
charges, |
| |
restructuring
charges within the A&D segment and Corporate acquisition
related costs. |
| |
The $0.12 of EPS
adjustments per share consists of $4.1 million of pre-tax
charges |
| |
offset by $0.9 million of tax
benefit for net impact of $3.2 million |
|
|
| |
|
|
|
| EPS – Adjusted
Basis Reconciliation – Q4 2022 |
|
|
| |
EPS – GAAP Basis – Q4
2022 |
$ |
1.19 |
|
|
Adjustments (defined
below) |
|
0.02 |
|
|
EPS – As Adjusted Basis – Q4
2022 |
$ |
1.21 |
|
|
|
|
|
| |
Adjustments exclude $0.02 per
share consisting of after-tax severance charges |
|
|
| |
at VACCO and NRG and Corporate
management transition costs. |
|
|
| |
The $0.02 of EPS
adjustments per share consists of $0.6 million of pre-tax
charges |
| |
offset by $0.2 million of tax
benefit for net impact of $0.4 million. |
|
|
| |
|
|
|
| EPS – Adjusted
Basis Reconciliation – FY 2022 |
|
|
| |
EPS – GAAP Basis – FY
2022 |
$ |
3.16 |
|
|
Adjustments (defined
below) |
|
0.05 |
|
|
EPS – As Adjusted Basis – FY
2022 |
$ |
3.21 |
|
|
|
|
|
| |
Adjustments
exclude $0.05 per share consisting of Altanova & Neco
acquisition inventory |
| |
step-up charges,
severance charges at VACCO and NRG, Corporate acquisition costs
and |
| |
management transition
costs. |
|
|
| |
The $0.05 of EPS
adjustments per share consists of $1.7 million of pre-tax
charges |
| |
offset by $0.4 million of tax
benefit for net impact of $1.3 million |
|
|
SOURCE ESCO Technologies Inc.Kate Lowrey, Vice President of
Investor Relations, (314) 213-7277
ESCO Technologies (NYSE:ESE)
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ESCO Technologies (NYSE:ESE)
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