Missouri
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1-10596
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43-1554045
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(State or Other
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(Commission
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(I.R.S. Employer
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Jurisdiction of Incorporation)
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File Number)
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Identification No.)
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9900A Clayton Road, St. Louis, Missouri
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63124-1186
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(Address of Principal Executive Offices)
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(Zip Code)
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b))
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.113d-4 (c))
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1.
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The voting for directors was as follows:
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Nominee
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For
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Withheld
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Broker Non-Votes
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L.W. Solley
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23,731,608 | 853,151 | 929,778 | ||||||||||
J.D. Woods
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24,041,625 | 543,494 | 929,778 | ||||||||||
G.E. Muenster
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20,859,227 | 3,725,532 | 929,778 |
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2.
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The voting to ratify the Registrant’s appointment of KPMG LLP as the Registrant’s independent registered public accounting firm for the fiscal year ending September 30, 2014 was as follows:
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For
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Against
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Abstain
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25,260,797
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245,113
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8,627
|
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3.
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The advisory vote on the resolution to approve the compensation of the Registrant’s executive officers was as follows:
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For
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Against
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Abstain
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Broker Non-Votes
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24,178,810
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380,905
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25,043
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929,779
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4.
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The vote on the shareholder proposal relating to sustainability reporting was as follows:
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For
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Against
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Abstain
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Broker Non-Votes
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5,353,326
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16,856,183
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2,375,248
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929,780
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G.E. Muenster
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Executive Vice President
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and Chief Financial Officer
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·
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Q1 2014 sales from Continuing Operations increased $14 million, or 13 percent to $124 million compared to $111 million in Q1 2013. During Q1, Filtration sales increased $9 million (20 percent), Test sales increased $3 million (9 percent), and Utility Solutions Group (USG, or Doble) sales increased $2 million (6 percent) compared to prior year Q1;
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·
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Q1 2014 gross margin from Continuing Operations increased to 40.3 percent compared to 39.6 percent in Q1 2013 resulting from an increased sales volume and a favorable sales mix;
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·
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SG&A from Continuing Operations was relatively flat in the comparable periods, despite the 2014 addition of Canyon Engineering and higher professional fees incurred at Corporate;
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·
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The effective tax rate in Q1 2014 was 35.7 percent compared to 33.4 percent in Q1 2013;
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·
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Q1 2014 GAAP EPS from Continuing Operations was $0.33 per share, compared to $0.20 per share in Q1 2013;
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·
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At December 31, 2013, the Company had $34 million of cash and $178 million of debt outstanding for a net debt position of $144 million;
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·
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Orders from Continuing Operations were $114 million in Q1 2014, resulting in a book-to-bill ratio of 0.91x, and a resulting backlog of $261 million at December 31, 2013.
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·
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Filtration is expected to grow 8 to 10 percent with related EBIT margins consistent with 2013;
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·
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Test is expected to grow mid-to-high single digits with a significant increase in EBIT, both in dollars and as a percent of sales resulting in an approximate EBIT margin of 13 percent;
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·
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Doble is expected to grow mid-to-high single digits with an EBIT margin percentage in the low 20’s similar to 2013; and,
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·
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Aclara will continue to be presented as Discontinued Operations up through and including the date of the sale.
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
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||||||||
Condensed Consolidated Statements of Operations (Unaudited)
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||||||||
(Dollars in thousands, except per share amounts)
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||||||||
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||||||||
Three Months
Ended
December 31,
2013
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Three Months
Ended
December 31,
2012
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|||||||
Net Sales
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124,450
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110,518
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||||||
Cost and Expenses:
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||||||||
Cost of sales
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74,281
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66,757
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||||||
Selling, general and administrative expenses
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33,872
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33,677
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||||||
Amortization of intangible assets
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1,686
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1,535
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||||||
Interest expense
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692
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585
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||||||
Other (income) expenses, net
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179
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(56)
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||||||
Total costs and expenses
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110,710
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102,498
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||||||
Earnings before income taxes
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13,740
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8,020
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||||||
Income taxes
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4,908
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2,677
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||||||
Net earnings from continuing operations
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8,832
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5,343
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||||||
Earnings (loss) from discontinued operations,
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||||||||
net of tax expense (benefit) of $1,306
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||||||||
and $(2,626), respectively
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2,357
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(5,097)
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||||||
Net earnings
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$
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11,189
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246
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|||||
Earnings (loss) per share:
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||||||||
Diluted - GAAP
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||||||||
Continuing operations
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0.33
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0.20
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||||||
Discontinued operations
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0.09
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(0.19)
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||||||
Net earnings
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$
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0.42
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0.01
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|||||
Diluted – As Adjusted Basis
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||||||||
Continuing operations
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$
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0.34
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(1)
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0.24
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(2)
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|||
Average common shares O/S:
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||||||||
Diluted
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26,738
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26,680
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||||||
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(1)
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Adjusted basis includes $0.2 million (or $0.01 per share) of add back adjustments for restructuring charges incurred at Crissair during the first quarter of fiscal 2014.
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|||||||
(2)
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Adjusted basis includes $1.4 million (or $0.04 per share) of add back adjustments for restructuring charges incurred at ETS during the first quarter of fiscal 2013.
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
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|||||||||||||||||||||||||||||||||
Condensed Business Segment Information (Unaudited)
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|||||||||||||||||||||||||||||||||
(Dollars in thousands)
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|||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||
Three Months
Ended
December 31,
GAAP
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Adjustments
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Three Months
Ended
December 31,
As Adjusted
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|||||||||||||||||||||||||||||||
2013
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2012
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2013
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2012
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2013
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2012
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||||||||||||||||||||||||||||
Net Sales
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|||||||||||||||||||||||||||||||||
Filtration
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$ | 55,478 | 46,352 | 55,478 | 46,352 | ||||||||||||||||||||||||||||
Test
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39,477 | 36,295 | 39,477 | 36,295 | |||||||||||||||||||||||||||||
Utility Solutions Group
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29,495 | 27,871 | 29,495 | 27,871 | |||||||||||||||||||||||||||||
Totals
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$ | 124,450 | 110,518 | 0 | 0 | 124,450 | 110,518 | ||||||||||||||||||||||||||
EBIT
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|||||||||||||||||||||||||||||||||
Filtration
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$ | 9,484 | 8,801 | 201 | (1) | 9,685 | 8,801 | ||||||||||||||||||||||||||
Test
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3,575 | 519 | 1,441 | (2) | 3,575 | 1,960 | |||||||||||||||||||||||||||
Utility Solutions Group
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7,647 | 5,454 | 7,647 | 5,454 | |||||||||||||||||||||||||||||
Corporate
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(6,274 | ) | (6,169 | ) | (6,274 | ) | (6,169 | ) | |||||||||||||||||||||||||
Consolidated EBIT
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14,432 | 8,605 | 201 | 1,441 | 14,633 | 10,046 | |||||||||||||||||||||||||||
Less: Interest expense
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(692 | ) | (585 | ) | (692 | ) | (585 | ) | |||||||||||||||||||||||||
Earnings before income
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|||||||||||||||||||||||||||||||||
taxes from Cont Ops
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$ | 13,740 | 8,020 | 201 | 1,441 | 13,941 | 9,461 | ||||||||||||||||||||||||||
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Note: The above table is presented on a continuing operations basis.
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|||||||||||||||||||||||||||||||||
Note: Depreciation and amortization expense was $4.0 million and $3.6 million for the quarters ended
December 31, 2013 and 2012, respectively.
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(1)
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Includes $0.2 million (or $0.01) of restructuring charges at Crissair during the first quarter 2014.
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||||||||||||||||||||||||||||||||
(2) |
Includes $1.4 million (or $0.04) of restructuring charges for ETS during the first quarter 2013.
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||||||||||||||||||||||||||||||||
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited)
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||||||||
(Dollars in thousands)
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||||||||
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||||||||
December 31,
2013
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September 30,
2013
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|||||||
Assets
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||||||||
Cash and cash equivalents
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$ | 34,367 | 42,850 | |||||
Accounts receivable, net
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88,480 | 91,980 | ||||||
Costs and estimated earnings on
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||||||||
long-term contracts
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16,577 | 20,717 | ||||||
Inventories
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93,805 | 90,228 | ||||||
Current portion of deferred tax assets
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23,684 | 23,349 | ||||||
Other current assets
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7,344 | 15,930 | ||||||
Assets held for sale - current
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119,547 | 108,867 | ||||||
Total current assets
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383,804 | 393,921 | ||||||
Property, plant and equipment, net
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75,265 | 75,536 | ||||||
Intangible assets, net
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180,543 | 180,217 | ||||||
Goodwill
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283,399 | 282,949 | ||||||
Other assets
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9,118 | 9,469 | ||||||
Assets held for sale - other
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151,711 | 150,236 | ||||||
$ | 1,083,840 | 1,092,328 | ||||||
Liabilities and Shareholders' Equity
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||||||||
Current maturities of long-term debt
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$ | 50,507 | 50,000 | |||||
Accounts payable
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25,155 | 38,537 | ||||||
Current portion of deferred revenue
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16,233 | 17,508 | ||||||
Other current liabilities
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53,584 | 60,726 | ||||||
Liabilities held for sale - current
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61,577 | 63,585 | ||||||
Total current liabilities
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207,056 | 230,356 | ||||||
Deferred tax liabilities
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101,533 | 99,795 | ||||||
Other liabilities
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22,119 | 22,437 | ||||||
Long-term debt
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127,000 | 122,000 | ||||||
Liabilities held for sale - other
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14,961 | 16,026 | ||||||
Shareholders' equity
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611,171 | 601,714 | ||||||
$ | 1,083,840 | 1,092,328 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||
Consolidated Statements of Cash Flows (Unaudited)
|
||||
(Dollars in thousands)
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||||
|
||||
Three Months
Ended
December 31, 2013
|
||||
Cash flows from operating activities:
|
||||
Net earnings
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$ | 11,189 | ||
Adjustments to reconcile net earnings
|
||||
to net cash used by operating activities:
|
||||
Net earnings from discontinued operations
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(2,357 | ) | ||
Depreciation and amortization
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4,040 | |||
Stock compensation expense
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1,249 | |||
Changes in current assets and liabilities
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(7,954 | ) | ||
Effect of deferred taxes
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1,403 | |||
Change in deferred revenue and costs, net
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(1,196 | ) | ||
Pension contributions
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(500 | ) | ||
Other
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(1,562 | ) | ||
Net cash provided by operating activities - continuing operations
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4,312 | |||
Net cash used by operating activities - discontinued operations
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(10,997 | ) | ||
Net cash used by operating activities
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(6,685 | ) | ||
Cash flows from investing activities:
|
||||
Capital expenditures
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(2,135 | ) | ||
Additions to capitalized software
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(1,826 | ) | ||
Net cash used by investing activities - continuing operations
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(3,961 | ) | ||
Net cash used by investing activities - discontinued operations
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(1,794 | ) | ||
Net cash used by investing activities
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(5,755 | ) | ||
Cash flows from financing activities:
|
||||
Proceeds from long-term debt
|
20,507 | |||
Principal payments on long-term debt
|
(15,000 | ) | ||
Dividends paid
|
(2,124 | ) | ||
Net cash provided by financing activities
|
3,383 | |||
Effect of exchange rate changes on cash and cash equivalents
|
574 | |||
Net decrease in cash and cash equivalents
|
(8,483 | ) | ||
Cash and cash equivalents, beginning of period
|
42,850 | |||
Cash and cash equivalents, end of period
|
$ | 34,367 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||||||||
Other Selected Financial Data (Unaudited)
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
|
||||||||||||||||
Backlog And Entered Orders - Q1 FY 2014
|
Utility
Solutions
|
Test
|
Filtration
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Total
|
||||||||||||
Beginning Backlog - 10/1/13
|
$ | 24,047 | 90,427 | 157,675 | 272,149 | |||||||||||
Entered Orders
|
28,358 | 30,993 | 54,179 | 113,530 | ||||||||||||
Sales
|
(29,495 | ) | (39,477 | ) | (55,478 | ) | (124,450 | ) | ||||||||
Ending Backlog - 12/31/13
|
$ | 22,910 | 81,943 | 156,376 | 261,229 | |||||||||||
|
||||||||||||||||
Note: The above table is presented on a continuing operations basis and excludes Aclara. Aclara's entered orders were $40.6 million for the quarter ended December 31, 2013.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||
Reconciliation of Non-GAAP Financial Measures (Unaudited)
|
||||||||
|
||||||||
EPS – Adjusted Basis Reconciliation – Q1 FY 2014
|
||||||||
EPS from Continuing Ops – GAAP Basis – Q1 2014
|
$ | 0.33 | ||||||
Adjustments (defined below)
|
0.01 | |||||||
EPS from Continuing Ops – As Adjusted Basis – Q1 2014
|
$ | 0.34 | ||||||
Adjustments exclude $0.01 per share consisting of restructuring costs associated with the Filtration (Crissair) segment facility consolidation.
|
||||||||
EPS – Adjusted Basis Reconciliation – FY 2014
|
||||||||
EPS from Continuing Ops – GAAP Basis – FY 2014
|
$ | 1.45 | 1.55 | |||||
Adjustments (defined below)
|
0.05 | 0.05 | ||||||
EPS from Continuing Ops – As Adjusted Basis – FY 2014
|
$ | 1.50 | 1.60 | |||||
Adjustments exclude $0.05 per share consisting of restructuring costs associated with the Filtration (Crissair) segment facility consolidation.
|