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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Exhibit No.
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Description of Exhibit
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99.1
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Press Release dated May 3, 2016
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|
Gary 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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Q2 2016 sales increased $10 million, or 8 percent, to $139 million compared to $129 million in Q2 2015;
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·
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Q2 2016 Filtration sales increased $0.3 million (aerospace sales increased, partially offset by VACCO’s sales decrease due to quarterly timing), Technical Packaging sales increased $10 million (Plastique added $5 million in sales for its first two months of operations since the date of acquisition), Test sales decreased $1 million (project timing in the respective quarterly periods), and USG sales increased $2 million (higher software and services revenues);
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·
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Q2 gross margin percentages were approximately 37 percent in both periods presented;
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·
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Despite the addition of Plastique and Fremont during 2016, SG&A decreased in Q2 2016, resulting from a lower cost structure at Test and Doble, lower operating costs in Filtration, partially offset by higher Corporate spending on professional fees primarily related to M&A activities;
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·
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The effective tax rate was 36.8 percent in Q2 2016 compared to 37.6 percent in Q2 2015;
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·
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Q2 2016 orders were $130 million and YTD 2016 orders $273 million, which resulted in an ending backlog of $328 million at March 31, 2016; and,
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·
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Net debt at March 31, 2016 was $60 million ($39 million of cash and $99 million of borrowings) and includes the impact of the purchases of Plastique and Fremont in 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||
Condensed Consolidated Statements of Operations (Unaudited)
|
||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||
|
||||||||||
Three Months
Ended
March 31, 2016
|
Three Months
Ended
March 31, 2015
|
|||||||||
Net Sales
|
$ | 138,930 | 128,941 |
Cost and Expenses:
|
||||||||||
Cost of sales
|
88,118 | 81,142 | ||||||||
Selling, general and administrative expenses
|
32,529 | 32,931 | ||||||||
Amortization of intangible assets
|
2,895 | 2,220 | ||||||||
Interest expense
|
368 | 213 | ||||||||
Other expenses (income), net
|
1,405 | (354 | ) | |||||||
Total costs and expenses
|
125,315 | 116,152 | ||||||||
Earnings before income taxes
|
13,615 | 12,789 | ||||||||
Income taxes
|
5,005 | 4,807 | ||||||||
Net earnings from continuing operations
|
8,610 | 7,982 | ||||||||
Loss from discontinued operations, net of tax
|
||||||||||
benefit of $201
|
0 | (372 | ) | |||||||
Net earnings
|
$ | 8,610 | 7,610 | |||||||
Diluted EPS - GAAP
|
||||||||||
Continuing operations
|
$ | 0.33 | 0.30 | |||||||
Discontinued operations
|
0.00 | (0.01 | ) | |||||||
Net earnings
|
0.33 | 0.29 | ||||||||
Diluted EPS - As Adjusted
|
$ | 0.40 | (1) |
|
0.29 | |||||
Diluted average common shares O/S:
|
25,931 | 26,179 | ||||||||
(1)
|
As Adjusted excludes $1.7 million (or $0.07 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during the second quarter of fiscal 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||
Condensed Consolidated Statements of Operations (Unaudited)
|
|||||||||
(Dollars in thousands, except per share amounts)
|
|||||||||
|
|||||||||
Six Months
Ended
March 31, 2016
|
Six Months
Ended
March 31, 2015
|
||||||||
Net Sales
|
$ | 271,763 | 249,488 | ||||||
Cost and Expenses:
|
|||||||||
Cost of sales
|
168,167 | 152,763 | |||||||
Selling, general and administrative expenses
|
65,820 | 66,435 | |||||||
Amortization of intangible assets
|
5,589 | 4,093 | |||||||
Interest expense
|
597 | 408 | |||||||
Other expenses (income), net
|
5,007 | (575 | ) | ||||||
Total costs and expenses
|
245,180 | 223,124 | |||||||
Earnings before income taxes
|
26,583 | 26,364 | |||||||
Income taxes
|
9,144 | 8,359 | |||||||
Net earnings from continuing operations
|
17,439 | 18,005 | |||||||
Loss from discontinued operations, net of tax
|
|||||||||
benefit of $201
|
0 | (372 | ) | ||||||
Net earnings
|
$ | 17,439 | 17,633 | ||||||
Diluted EPS - GAAP
|
|||||||||
Continuing operations
|
$ | 0.67 | 0.68 | ||||||
Discontinued operations
|
0.00 | (0.01 | ) | ||||||
Net earnings
|
0.67 | 0.67 | |||||||
Diluted EPS - As Adjusted
|
$ | 0.87 | (1) |
|
0.67 | ||||
Diluted average common shares O/S:
|
25,986 | 26,302 | |||||||
(1)
|
As Adjusted excludes $5.2 million (or $0.20 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during the first six months of fiscal 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||||||||||||||
Condensed Business Segment Information (Unaudited)
|
|||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
|
|||||||||||||||||||||
GAAP
|
Q2 2016
Adjustments
(1)
|
As Adjusted
|
|||||||||||||||||||
Q2 2016 | Q2 2015 | Q2 2016 | Q2 2015 | ||||||||||||||||||
Net Sales
|
|||||||||||||||||||||
Filtration
|
$ | 49,045 | 48,773 | 49,045 | 48,773 | ||||||||||||||||
Technical Packaging
|
19,270 | 9,655 | 19,270 | 9,655 | |||||||||||||||||
Test
|
40,601 | 42,084 | 40,601 | 42,084 | |||||||||||||||||
USG
|
30,014 | 28,429 | 30,014 | 28,429 | |||||||||||||||||
Totals
|
$ | 138,930 | 128,941 | 0 | 138,930 | 128,941 | |||||||||||||||
EBIT
|
|||||||||||||||||||||
Filtration
|
$ | 9,064 | 10,987 | 9,064 | 10,987 | ||||||||||||||||
Technical Packaging
|
2,747 | 1,064 | 2,747 | 1,064 | |||||||||||||||||
Test
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2,505 | 2,465 | 1,201 | 3,706 | 2,465 | ||||||||||||||||
USG
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7,208 | 4,855 | 171 | 7,379 | 4,855 | ||||||||||||||||
Corporate
|
(7,541 | ) | (6,369 | ) | 10 | (7,531 | ) | (6,369 | ) | ||||||||||||
Consolidated EBIT
|
13,983 | 13,002 | 1,382 | 15,365 | 13,002 | ||||||||||||||||
Less: Interest expense
|
(368 | ) | (213 | ) | (368 | ) | (213 | ) | |||||||||||||
Less: Income tax expense
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(5,005 | ) | (4,807 | ) | 367 | (4,638 | ) | (4,807 | ) | ||||||||||||
Net earnings from cont ops
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$ | 8,610 | 7,982 | 1,749 | 10,359 | 7,982 | |||||||||||||||
|
Note:
|
Depreciation and amortization expense was $5.9 million and $4.6 million for the quarters ended March 31, 2016 and 2015, respectively.
|
|
(1)
|
Adjustments consist of $1.7 million (or $0.07 per share) of restructuring charges at ETS & Doble during the second quarter of 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||||||||||||||
Condensed Business Segment Information (Unaudited)
|
|||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
|
|||||||||||||||||||||
GAAP
|
YTD
Q2 2016
Adjustments
(1)
|
As Adjusted
|
|||||||||||||||||||
YTD
|
YTD
|
YTD
|
YTD
|
||||||||||||||||||
Q2 2016 | Q2 2015 | Q2 2016 | Q2 2015 | ||||||||||||||||||
Net Sales
|
|||||||||||||||||||||
Filtration
|
$ | 91,361 | 89,657 | 91,361 | 89,657 | ||||||||||||||||
Technical Packaging
|
32,491 | 16,282 | 32,491 | 16,282 | |||||||||||||||||
Test
|
83,374 | 81,505 | 83,374 | 81,505 | |||||||||||||||||
USG
|
64,537 | 62,044 | 64,537 | 62,044 | |||||||||||||||||
Totals
|
$ | 271,763 | 249,488 | 0 | 271,763 | 249,488 | |||||||||||||||
EBIT
|
|||||||||||||||||||||
Filtration
|
$ | 17,348 | 18,337 | 17,348 | 18,337 | ||||||||||||||||
Technical Packaging
|
4,560 | 790 | 4,560 | 790 | |||||||||||||||||
Test
|
4,843 | 5,059 | 3,713 | 8,556 | 5,059 | ||||||||||||||||
USG
|
15,457 | 14,832 | 1,494 | 16,951 | 14,832 | ||||||||||||||||
Corporate
|
(15,028 | ) | (12,246 | ) | 303 | (14,725 | ) | (12,246 | ) | ||||||||||||
Consolidated EBIT
|
27,180 | 26,772 | 5,510 | 32,690 | 26,772 | ||||||||||||||||
Less: Interest expense
|
(597 | ) | (408 | ) | (597 | ) | (408 | ) | |||||||||||||
Less: Income tax expense
|
(9,144 | ) | (8,359 | ) | (294 | ) | (9,438 | ) | (8,359 | ) | |||||||||||
Net earnings from cont ops
|
$ | 17,439 | 18,005 | 5,216 | 22,655 | 18,005 | |||||||||||||||
|
Note:
|
Depreciation and amortization expense was $11.2 million and $8.9 million for the six month periods ended March 31, 2016 and 2015, respectively.
|
|
(1)
|
Adjustments consist of $5.2 million (or $0.20 per share) of restructuring charges at ETS & Doble during the first six months of 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited)
|
||||||||
(Dollars in thousands)
|
||||||||
|
||||||||
March 31,
2016
|
September 30,
2015
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 38,759 | 39,411 | |||||
Accounts receivable, net
|
123,812 | 102,607 | ||||||
Costs and estimated earnings on
|
||||||||
long-term contracts
|
23,756 | 28,387 | ||||||
Inventories
|
103,418 | 99,786 | ||||||
Current portion of deferred tax assets
|
15,618 | 15,558 | ||||||
Other current assets
|
15,594 | 12,502 | ||||||
Total current assets
|
320,957 | 298,251 | ||||||
Property, plant and equipment, net
|
89,954 | 77,358 | ||||||
Intangible assets, net
|
204,215 | 190,748 | ||||||
Goodwill
|
305,758 | 291,157 | ||||||
Other assets
|
7,792 | 6,694 | ||||||
$ | 928,676 | 864,208 | ||||||
Liabilities and Shareholders' Equity
|
||||||||
Short-term borrowings and current
|
$ | 20,890 | 20,000 | |||||
maturities of long-term debt
|
||||||||
Accounts payable
|
34,195 | 37,863 | ||||||
Current portion of deferred revenue
|
23,016 | 21,498 | ||||||
Other current liabilities
|
60,950 | 63,850 | ||||||
Total current liabilities
|
139,051 | 143,211 | ||||||
Deferred tax liabilities
|
78,805 | 74,469 | ||||||
Other liabilities
|
35,569 | 32,346 | ||||||
Long-term debt
|
78,000 | 30,000 | ||||||
Shareholders' equity
|
597,251 | 584,182 | ||||||
$ | 928,676 | 864,208 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||
Consolidated Statements of Cash Flows (Unaudited)
|
||||
(Dollars in thousands)
|
||||
|
||||
Six Months Ended
March 31, 2016
|
||||
Cash flows from operating activities:
|
||||
Net earnings
|
$ | 17,439 | ||
Adjustments to reconcile net earnings
|
||||
to net cash provided by operating activities:
|
||||
Depreciation and amortization
|
11,238 | |||
Stock compensation expense
|
2,689 | |||
Changes in assets and liabilities
|
(26,494 | ) | ||
Effect of deferred taxes
|
1,646 | |||
Change in deferred revenue and costs, net
|
1,992 | |||
Other
|
569 | |||
Net cash provided by operating activities
|
9,079 | |||
Cash flows from investing activities:
|
||||
Acquisition of businesses, net of cash acquired
|
(41,308 | ) | ||
Capital expenditures
|
(5,284 | ) | ||
Additions to capitalized software
|
(3,716 | ) | ||
Net cash used by investing activities
|
(50,308 | ) | ||
Cash flows from financing activities:
|
||||
Proceeds from long-term debt
|
76,890 | |||
Principal payments on long-term debt
|
(28,000 | ) | ||
Dividends paid
|
(4,131 | ) | ||
Purchases of common stock into treasury
|
(3,088 | ) | ||
Debt issuance costs
|
(1,037 | ) | ||
Other
|
89 | |||
Net cash provided by financing activities
|
40,723 | |||
Effect of exchange rate changes on cash and cash equivalents
|
(146 | ) | ||
Net decrease in cash and cash equivalents
|
(652 | ) | ||
Cash and cash equivalents, beginning of period
|
39,411 | |||
Cash and cash equivalents, end of period
|
$ | 38,759 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||||||||||||
Other Selected Financial Data (Unaudited)
|
||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
|
||||||||||||||||||||
Backlog and Entered Orders - Q2 FY 2016
|
USG
|
Test
|
Filtration
|
Technical
Packaging
|
Total
|
|||||||||||||||
Beginning Backlog - 1/1/16
|
$ | 32,977 | 91,297 | 193,329 | 19,797 | 337,400 | ||||||||||||||
Entered Orders
|
29,040 | 34,674 | 42,191 | 23,983 | 129,888 | |||||||||||||||
Sales
|
(30,014 | ) | (40,601 | ) | (49,045 | ) | (19,270 | ) | (138,930 | ) | ||||||||||
Ending Backlog - 3/31/16
|
$ | 32,003 | 85,370 | 186,475 | 24,510 | 328,358 | ||||||||||||||
Backlog and Entered Orders - YTD Q2 FY 2016
|
USG
|
Test
|
Filtration
|
Technical
Packaging
|
Total
|
|||||||||||||||
Beginning Backlog - 10/1/15
|
$ | 36,272 | 95,129 | 178,844 | 17,264 | 327,509 | ||||||||||||||
Entered Orders
|
60,268 | 73,615 | 98,992 | 39,737 | 272,612 | |||||||||||||||
Sales
|
(64,537 | ) | (83,374 | ) | (91,361 | ) | (32,491 | ) | (271,763 | ) | ||||||||||
Ending Backlog - 3/31/16
|
$ | 32,003 | 85,370 | 186,475 | 24,510 | 328,358 |
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