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 August 2, 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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Q3 2016 sales increased $6 million, or 4 percent, to $140 million compared to $134 million in Q3 2015;
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·
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Q3 2016 Filtration sales increased $5 million, or 10 percent (aerospace sales increased $2 million, or 7 percent, and VACCO sales increased $3 million, or 15 percent), Technical Packaging sales increased $10 million (recently acquired Plastique added $8 million in sales and TEQ sales increased $2 million), Test sales decreased $7 million (due to timing of large chamber projects in the respective quarterly periods), and USG sales decreased $2 million (lower hardware sales, partially offset by higher software and services revenues);
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·
|
Q3 gross margins were approximately 38 percent in both periods presented;
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·
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Despite the addition of the Plastique and Fremont acquisitions, Q3 2016 SG&A decreased 4 percent compared to Q3 2015, due to a lower cost structure at Test and Doble and lower operating costs in Filtration, partially offset by higher Corporate spending on professional fees;
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·
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The effective tax rate was 34.2 percent in Q3 2016 compared to 31.0 percent in Q3 2015;
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·
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Q3 2016 orders were $125 million and YTD 2016 orders totaled $398 million, which resulted in an ending backlog of $313 million at June 30, 2016; and,
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·
|
Net debt (outstanding borrowings less cash on hand) at June 30, 2016 was $46 million and reflects the borrowings in connection with the 2016 acquisitions of Plastique and Fremont, and the spending on cumulative share repurchases.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||
Condensed Consolidated Statements of Operations (Unaudited)
|
|||||||||
(Dollars in thousands, except per share amounts)
|
|||||||||
|
|||||||||
Three Months
Ended
June 30, 2016
|
Three Months
Ended
June 30, 2015
|
||||||||
Net Sales
|
$ | 140,191 | 134,191 | ||||||
Cost and Expenses:
|
|||||||||
Cost of sales
|
86,602 | 82,956 | |||||||
Selling, general and administrative expenses
|
31,369 | 32,786 | |||||||
Amortization of intangible assets
|
2,951 | 2,285 | |||||||
Interest expense
|
320 | 247 | |||||||
Other expenses (income), net
|
1,429 | 337 | |||||||
Total costs and expenses
|
122,671 | 118,611 | |||||||
Earnings before income taxes
|
17,520 | 15,580 | |||||||
Income taxes
|
5,992 | 4,832 | |||||||
Net earnings from continuing operations
|
11,528 | 10,748 | |||||||
Earnings from discontinued operations, net of tax
|
|||||||||
expense of $591
|
0 | 1,148 | |||||||
Net earnings
|
$ | 11,528 | 11,896 | ||||||
Diluted EPS - GAAP
|
|||||||||
Continuing operations
|
$ | 0.44 | 0.41 | ||||||
Discontinued operations
|
0.00 | 0.04 | |||||||
Net earnings
|
0.44 | 0.45 | |||||||
Diluted EPS - As Adjusted
|
$ | 0.49 | (1) |
|
0.41 | ||||
Diluted average common shares O/S:
|
25,910 | 26,180 |
(1)
|
As Adjusted excludes $1.1 million (or $0.05 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during the third quarter of fiscal 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||
Condensed Consolidated Statements of Operations (Unaudited)
|
|||||||||
(Dollars in thousands, except per share amounts)
|
|||||||||
|
|||||||||
Nine Months
Ended
June 30, 2016
|
Nine Months
Ended
June 30, 2015
|
||||||||
Net Sales
|
$ | 411,954 | 383,679 | ||||||
Cost and Expenses:
|
|||||||||
Cost of sales
|
254,769 | 235,719 | |||||||
Selling, general and administrative expenses
|
97,189 | 99,221 | |||||||
Amortization of intangible assets
|
8,540 | 6,378 | |||||||
Interest expense
|
917 | 655 | |||||||
Other expenses (income), net
|
6,436 | (238 | ) | ||||||
Total costs and expenses
|
367,851 | 341,735 | |||||||
Earnings before income taxes
|
44,103 | 41,944 | |||||||
Income taxes
|
15,136 | 13,191 | |||||||
Net earnings from continuing operations
|
28,967 | 28,753 | |||||||
Earnings from discontinued operations, net of tax
|
|||||||||
expense of $390
|
0 | 776 | |||||||
Net earnings
|
$ | 28,967 | 29,529 | ||||||
Diluted EPS - GAAP
|
|||||||||
Continuing operations
|
$ | 1.12 | 1.09 | ||||||
Discontinued operations
|
0.00 | 0.03 | |||||||
Net earnings
|
1.12 | 1.12 | |||||||
Diluted EPS - As Adjusted
|
$ | 1.36 | (1) |
|
1.09 | ||||
Diluted average common shares O/S:
|
25,962 | 26,252 | |||||||
(1)
|
As Adjusted excludes $6.3 million (or $0.24 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during the first nine months of fiscal 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||||||||||||||
Condensed Business Segment Information (Unaudited)
|
|||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
|
|||||||||||||||||||||
GAAP
|
Q3 2016
Adjustments
(1)
|
As Adjusted
|
|||||||||||||||||||
Q3 2016 | Q3 2015 | Q3 2016 | Q3 2015 | ||||||||||||||||||
|
|||||||||||||||||||||
Net Sales
|
|||||||||||||||||||||
Filtration
|
$ | 54,396 | 49,615 | 54,396 | 49,615 | ||||||||||||||||
Technical Packaging
|
20,440 | 10,786 | 20,440 | 10,786 | |||||||||||||||||
Test
|
36,234 | 42,945 | 36,234 | 42,945 | |||||||||||||||||
USG
|
29,121 | 30,845 | 29,121 | 30,845 | |||||||||||||||||
Totals
|
$ | 140,191 | 134,191 | 0 | 140,191 | 134,191 | |||||||||||||||
EBIT
|
|||||||||||||||||||||
Filtration
|
$ | 12,163 | 10,372 | 12,163 | 10,372 | ||||||||||||||||
Technical Packaging
|
2,474 | 1,913 | 2,474 | 1,913 | |||||||||||||||||
Test
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3,744 | 2,014 | 1,002 | 4,746 | 2,014 | ||||||||||||||||
USG
|
6,124 | 7,357 | 426 | 6,550 | 7,357 | ||||||||||||||||
Corporate
|
(6,665 | ) | (5,829 | ) | 25 | (6,640 | ) | (5,829 | ) | ||||||||||||
Consolidated EBIT
|
17,840 | 15,827 | 1,453 | 19,293 | 15,827 | ||||||||||||||||
Less: Interest expense
|
(320 | ) | (247 | ) | (320 | ) | (247 | ) | |||||||||||||
Less: Income tax expense
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(5,992 | ) | (4,832 | ) | (340 | ) | (6,332 | ) | (4,832 | ) | |||||||||||
Net earnings from cont ops
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$ | 11,528 | 10,748 | 1,113 | 12,641 | 10,748 | |||||||||||||||
|
Note:
|
Depreciation and amortization expense was $6.0 million and $4.7 million for the quarters ended June 30, 2016 and 2015, respectively.
|
||||||||||||||||||||
|
(1)
|
Adjustments consist of $1.1 million (or $0.05 per share) of restructuring charges primarily at ETS & Doble during the third quarter of 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||||||||||||||
Condensed Business Segment Information (Unaudited)
|
|||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
|
|||||||||||||||||||||
GAAP
|
YTD
Q3 2016 Adjustments
(1)
|
As Adjusted
|
|||||||||||||||||||
YTD
|
YTD
|
YTD
|
YTD
|
||||||||||||||||||
Q3 2016 | Q3 2015 | Q3 2016 | Q3 2015 | ||||||||||||||||||
|
|||||||||||||||||||||
Net Sales
|
|||||||||||||||||||||
Filtration
|
$ | 145,758 | 139,272 | 145,758 | 139,272 | ||||||||||||||||
Technical Packaging
|
52,931 | 27,068 | 52,931 | 27,068 | |||||||||||||||||
Test
|
119,608 | 124,449 | 119,608 | 124,449 | |||||||||||||||||
USG
|
93,657 | 92,890 | 93,657 | 92,890 | |||||||||||||||||
Totals
|
$ | 411,954 | 383,679 | 0 | 411,954 | 383,679 | |||||||||||||||
EBIT
|
|||||||||||||||||||||
Filtration
|
$ | 29,511 | 28,709 | 29,511 | 28,709 | ||||||||||||||||
Technical Packaging
|
7,035 | 2,703 | 7,035 | 2,703 | |||||||||||||||||
Test
|
8,587 | 7,073 | 4,715 | 13,302 | 7,073 | ||||||||||||||||
USG
|
21,581 | 22,189 | 1,920 | 23,501 | 22,189 | ||||||||||||||||
Corporate
|
(21,694 | ) | (18,075 | ) | 328 | (21,366 | ) | (18,075 | ) | ||||||||||||
Consolidated EBIT
|
45,020 | 42,599 | 6,963 | 51,983 | 42,599 | ||||||||||||||||
Less: Interest expense
|
(917 | ) | (655 | ) | (917 | ) | (655 | ) | |||||||||||||
Less: Income tax expense
|
(15,136 | ) | (13,191 | ) | (634 | ) | (15,770 | ) | (13,191 | ) | |||||||||||
Net earnings from cont ops
|
$ | 28,967 | 28,753 | 6,329 | 35,296 | 28,753 | |||||||||||||||
|
Note:
|
Depreciation and amortization expense was $17.2 million and $13.6 million for the nine month periods ended June 30, 2016 and 2015, respectively.
|
|||||||||||
(1)
|
Adjustments consist of $6.3 million (or $0.24 per share) of restructuring charges primarily at ETS & Doble during the first nine months of 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited)
|
||||||||
(Dollars in thousands)
|
||||||||
|
||||||||
June 30,
2016
|
September 30,
2015
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 40,542 | 39,411 | |||||
Accounts receivable, net
|
115,158 | 102,607 | ||||||
Costs and estimated earnings on
|
||||||||
long-term contracts
|
25,781 | 28,387 | ||||||
Inventories
|
105,534 | 99,786 | ||||||
Current portion of deferred tax assets
|
16,657 | 15,558 | ||||||
Other current assets
|
18,188 | 12,502 | ||||||
Total current assets
|
321,860 | 298,251 | ||||||
Property, plant and equipment, net
|
89,037 | 77,358 | ||||||
Intangible assets, net
|
203,871 | 190,748 | ||||||
Goodwill
|
305,704 | 291,157 | ||||||
Other assets
|
7,776 | 6,694 | ||||||
$ | 928,248 | 864,208 | ||||||
Liabilities and Shareholders' Equity
|
||||||||
Short-term borrowings and current
|
$ | 21,458 | 20,000 | |||||
maturities of long-term debt
|
||||||||
Accounts payable
|
34,543 | 37,863 | ||||||
Current portion of deferred revenue
|
24,190 | 21,498 | ||||||
Other current liabilities
|
63,700 | 63,850 | ||||||
Total current liabilities
|
143,891 | 143,211 | ||||||
Deferred tax liabilities
|
79,339 | 74,469 | ||||||
Other liabilities
|
35,761 | 32,346 | ||||||
Long-term debt
|
65,000 | 30,000 | ||||||
Shareholders' equity
|
604,257 | 584,182 | ||||||
$ | 928,248 | 864,208 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||
Consolidated Statements of Cash Flows (Unaudited)
|
||||
(Dollars in thousands)
|
||||
|
||||
Nine Months Ended
June 30, 2016
|
||||
Cash flows from operating activities:
|
||||
Net earnings
|
$ | 28,967 | ||
Adjustments to reconcile net earnings
|
||||
to net cash provided by operating activities:
|
||||
Depreciation and amortization
|
17,209 | |||
Stock compensation expense
|
3,652 | |||
Changes in assets and liabilities
|
(21,106 | ) | ||
Effect of deferred taxes
|
1,141 | |||
Change in deferred revenue and costs, net
|
3,029 | |||
Other
|
350 | |||
Net cash provided by operating activities
|
33,242 | |||
Cash flows from investing activities:
|
||||
Acquisition of businesses, net of cash acquired
|
(41,308 | ) | ||
Capital expenditures
|
(7,812 | ) | ||
Additions to capitalized software
|
(6,257 | ) | ||
Net cash used by investing activities
|
(55,377 | ) | ||
Cash flows from financing activities:
|
||||
Proceeds from long-term debt
|
81,458 | |||
Principal payments on long-term debt
|
(45,000 | ) | ||
Dividends paid
|
(6,191 | ) | ||
Purchases of common stock into treasury
|
(4,303 | ) | ||
Debt issuance costs
|
(1,037 | ) | ||
Other
|
(123 | ) | ||
Net cash provided by financing activities
|
24,804 | |||
Effect of exchange rate changes on cash and cash equivalents
|
(1,538 | ) | ||
Net increase in cash and cash equivalents
|
1,131 | |||
Cash and cash equivalents, beginning of period
|
39,411 | |||
Cash and cash equivalents, end of period
|
$ | 40,542 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||||||||||||
Other Selected Financial Data (Unaudited)
|
||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
|
||||||||||||||||||||
Backlog And Entered Orders -
Q3 FY 2016
|
USG
|
Test
|
Filtration
|
Technical
Packaging
|
Total
|
|||||||||||||||
Beginning Backlog - 4/1/16
|
$ | 32,003 | 85,370 | 186,475 | 24,510 | 328,358 | ||||||||||||||
Entered Orders
|
27,707 | 34,777 | 44,937 | 17,642 | 125,063 | |||||||||||||||
Sales
|
(29,121 | ) | (36,234 | ) | (54,396 | ) | (20,440 | ) | (140,191 | ) | ||||||||||
Ending Backlog - 6/30/16
|
$ | 30,589 | 83,913 | 177,016 | 21,712 | 313,230 | ||||||||||||||
Backlog And Entered Orders -
YTD Q3 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
|
87,974 | 108,392 | 143,930 | 57,379 | 397,675 | |||||||||||||||
Sales
|
(93,657 | ) | (119,608 | ) | (145,758 | ) | (52,931 | ) | (411,954 | ) | ||||||||||
Ending Backlog - 6/30/16
|
$ | 30,589 | 83,913 | 177,016 | 21,712 | 313,230 |
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