Missouri
|
1-10596
|
43-1554045
|
(State or Other
|
(Commission
|
(I.R.S. Employer
|
Jurisdiction of Incorporation)
|
File Number)
|
Identification No.)
|
9900A Clayton Road, St. Louis, Missouri
|
63124-1186
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
[ ]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b))
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.113d-4 (c))
|
1.
|
The voting for directors was as follows:
|
Nominee
|
“For”
|
“Withhold”
|
Broker Non-Votes
|
Percent of Shares Entitled to Vote Voting “For”
|
Vinod M. Khilnani
|
23,190,797
|
447,233
|
983,312
|
98.1%
|
Robert J. Phillippy
|
23,241,123
|
396,908
|
983,312
|
98.3%
|
Larry W. Solley
|
23,078,784
|
559,246
|
983,312
|
97.6%
|
“For”
|
“Against”
|
“Abstain”
|
Broker Non-Votes
|
Percent of Shares Entitled to Vote Voting “For”
|
24,415,107
|
202,347
|
3,889
|
0
|
99.2%
|
“For”
|
“Against”
|
“Abstain”
|
Broker Non-Votes
|
Percent of Shares Entitled to Vote Voting “For”
|
23,106,630
|
516,146
|
15,255
|
983,312
|
97.8%
|
“1 Year”
|
“2 Years”
|
“3 Years”
|
“Abstain”
|
Broker Non-Votes
|
Percent of Shares Entitled to Vote Voting “1 Year”
|
20,869,350
|
12,307
|
2,744,345
|
12,027
|
983,312
|
88.3%
|
(i)
|
The authorized size of the Board was reduced from eight (8) to seven (7) members, effective immediately, subject to further change in the discretion of the Board, and
|
(ii)
|
Director James M. Stolze, a Class II director with a term expiring in 2019, was reclassified, with his consent, as a Class I Director, with a term expiring in 2018.
|
Exhibit No.
|
Description of Exhibit
|
99.1
|
Press Release dated February 7, 2017
|
|
Gary E. Muenster
|
|
Executive Vice President
|
|
and Chief Financial Officer
|
·
|
Q1 2017 GAAP EPS was $0.41 per share compared to Management’s previous GAAP guidance range of $0.35 to $0.40 per share;
|
·
|
Compared to November expected guidance, the higher earnings were driven by increased software sales at Doble, additional operating efficiencies and a more favorable mix of commercial aerospace sales in Filtration, coupled with lower corporate spending. These were partially offset by lower sales and earnings resulting from the quarterly timing of deliveries on large projects at VACCO and Test;
|
·
|
Q1 2016 GAAP EPS was $0.34 per share and EPS – As Adjusted was $0.47 per share; and,
|
·
|
Q1 2017 EBITDA increased to $23.9 million from $18.6 million in Q1 2016.
|
·
|
Q1 2017 sales increased $14 million (10 percent) to $146 million compared to $133 million in Q1 2016;
|
·
|
On a segment basis, Q1 2017 Filtration sales increased $16.5 million, or 39 percent (Westland and Mayday added $6.7 million and $6.2 million, respectively); Technical Packaging sales increased $5 million (Plastique added $7 million in sales and TEQ sales decreased $2 million due to the slowdown of KAZ deliveries described in the November release); Test sales decreased $9 million (quarterly timing of orders now in backlog described below); and Doble sales increased $1 million (additional new products);
|
·
|
Despite the addition of the Plastique, Westland and Mayday acquisitions, Q1 2017 SG&A increased by only $0.5 million compared to Q1 2016. The additional SG&A costs related to these acquisitions were mitigated by a lower cost structure at Test and Doble, lower operating costs at PTI and Crissair, and lower Corporate spending;
|
·
|
Other (income) expenses, net in Q1 2016 included restructuring costs incurred at Test and Doble;
|
·
|
The effective tax rate was 33.5 percent in Q1 2017 compared to 31.9 percent in Q1 2016 which was favorably impacted by the extension of the research tax credit;
|
·
|
Q1 2017 orders were $183 million (book-to-bill of 1.25x) reflecting a $37 million (11 percent) increase in backlog during Q1 2017, which resulted in an ending backlog of $369 million at December 31, 2016;
|
·
|
Test orders were $56 million (book-to-bill of 1.66x) which reflects the catch-up of previously anticipated orders from a large/key customer, along with several other chamber project awards expected to be completed over the balance of 2017;
|
·
|
Doble orders were $40 million (book-to-bill of 1.11x) including strong orders for new products such as the Doble Universal Controller (DUC), additional software applications, and expanded service contracts;
|
·
|
Filtration orders were $68 million (book-to-bill of 1.15x) comprised of additional commercial aerospace orders and the addition of Mayday;
|
·
|
Technical Packaging orders were $20 million (book-to-bill of 1.09x) driven by higher medical, medical device, and pharmaceutical projects; and,
|
·
|
Net debt (outstanding borrowings less cash on hand) was $128 million at December 31, 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
|||||||||
Condensed Consolidated Statements of Operations (Unaudited)
|
|||||||||
(Dollars in thousands, except per share amounts)
|
|
||||||||||||||||
Three Months
Ended
December 31,
2016
|
Three Months
Ended
December 31,
2015
|
|||||||||||||||
Net Sales
|
$ | 146,368 | 132,833 | |||||||||||||
Cost and Expenses:
|
||||||||||||||||
Cost of sales
|
92,914 | 80,049 | ||||||||||||||
Selling, general and administrative expenses
|
33,762 | 33,291 | ||||||||||||||
Amortization of intangible assets
|
3,649 | 2,694 | ||||||||||||||
Interest expense
|
684 | 229 | ||||||||||||||
Other (income) expenses, net
|
(766 | ) | 3,602 | |||||||||||||
Total costs and expenses
|
130,243 | 119,865 | ||||||||||||||
Earnings before income taxes
|
16,125 | 12,968 | ||||||||||||||
Income taxes
|
5,398 | 4,139 | ||||||||||||||
Net earnings
|
$ | 10,727 | 8,829 | |||||||||||||
Diluted EPS - GAAP
|
$ | 0.41 | (1) | 0.34 | (2) | |||||||||||
Diluted average common shares O/S:
|
25,979 | 26,044 | ||||||||||||||
(1)
|
Includes Mayday inventory step up charge of $1.0 million and $1.7 million of additional depreciation and amortization compared to Q1 2016.
|
||||||||
(2)
|
Q1 2016 EPS - As Adjusted was $0.47 which excluded $4.1 million (or $0.13 per share) of restructuring charges incurred at ETS & Doble.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||||
Condensed Business Segment Information (Unaudited)
|
||||||||||||
(Dollars in thousands)
|
|
||||||||||||||||||||
GAAP
|
Q1 2016
Adjustments
(1)
|
As Adjusted
|
||||||||||||||||||
Q1 2017 | Q1 2016 | Q1 2017 | Q1 2016 | |||||||||||||||||
Net Sales
|
||||||||||||||||||||
Filtration
|
$ | 58,785 | 42,317 | - | 58,785 | 42,317 | ||||||||||||||
Test
|
33,827 | 42,773 | - | 33,827 | 42,773 | |||||||||||||||
USG
|
35,556 | 34,522 | - | 35,556 | 34,522 | |||||||||||||||
Technical Packaging
|
18,200 | 13,221 | - | 18,200 | 13,221 | |||||||||||||||
Totals
|
$ | 146,368 | 132,833 | - | 146,368 | 132,833 | ||||||||||||||
EBIT
|
||||||||||||||||||||
Filtration
|
$ | 10,726 | 8,284 | 10,726 | 8,284 | |||||||||||||||
Test
|
2,425 | 2,338 | 2,512 | 2,425 | 4,850 | |||||||||||||||
USG
|
9,674 | 8,249 | 1,323 | 9,674 | 9,572 | |||||||||||||||
Technical Packaging
|
1,031 | 1,813 | - | 1,031 | 1,813 | |||||||||||||||
Corporate
|
(7,047 | ) | (7,487 | ) | 293 | (7,047 | ) | (7,194 | ) | |||||||||||
Consolidated EBIT
|
16,809 | 13,197 | 4,128 | 16,809 | 17,325 | |||||||||||||||
Less: Interest expense
|
(684 | ) | (229 | ) | - | (684 | ) | (229 | ) | |||||||||||
Less: Income tax expense
|
(5,398 | ) | (4,139 | ) | (661 | ) | (5,398 | ) | (4,800 | ) | ||||||||||
Net earnings
|
$ | 10,727 | 8,829 | 3,467 | 10,727 | 12,296 |
|
||||||||||||
Note:
|
Depreciation and amortization expense increased $1.7 million in Q1 2017 and was $7.1 million and $5.4 million for the quarters ended December 31, 2016 and 2015, respectively.
|
|||||||||||
|
||||||||||||
(1)
|
Adjustments consist of $4.1 million (or $0.13 per share) of restructuring charges incurred at ETS and Doble during Q1 2016.
|
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Balance Sheets (Unaudited)
|
||||||
(Dollars in thousands)
|
|
||||||||
December 31,
2016
|
September 30,
2016
|
|||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 51,755 | 53,825 | |||||
Accounts receivable, net
|
127,231 | 121,486 | ||||||
Costs and estimated earnings on
|
||||||||
long-term contracts
|
25,165 | 28,746 | ||||||
Inventories
|
116,896 | 105,542 | ||||||
Other current assets
|
11,669 | 13,884 | ||||||
Total current assets
|
332,716 | 323,483 | ||||||
Property, plant and equipment, net
|
111,946 | 92,405 | ||||||
Intangible assets, net
|
266,408 | 231,759 | ||||||
Goodwill
|
353,303 | 323,616 | ||||||
Other assets
|
5,123 | 7,108 | ||||||
$ | 1,069,496 | 978,371 | ||||||
Liabilities and Shareholders' Equity
|
||||||||
Short-term borrowings and current
|
$ | 20,000 | 20,000 | |||||
maturities of long-term debt
|
||||||||
Accounts payable
|
37,310 | 42,074 | ||||||
Current portion of deferred revenue
|
26,868 | 27,212 | ||||||
Other current liabilities
|
65,213 | 68,790 | ||||||
Total current liabilities
|
149,391 | 158,076 | ||||||
Deferred tax liabilities
|
84,498 | 69,562 | ||||||
Other liabilities
|
54,970 | 45,624 | ||||||
Long-term debt
|
160,000 | 90,000 | ||||||
Shareholders' equity
|
620,637 | 615,109 | ||||||
$ | 1,069,496 | 978,371 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||
Consolidated Statements of Cash Flows (Unaudited)
|
||
(Dollars in thousands)
|
|
||||
Three Months
Ended
December 31,
2016
|
||||
Cash flows from operating activities:
|
||||
Net earnings
|
$ | 10,727 | ||
Adjustments to reconcile net earnings
|
||||
to net cash provided by operating activities:
|
||||
Depreciation and amortization
|
7,088 | |||
Stock compensation expense
|
1,437 | |||
Changes in assets and liabilities
|
(2,053 | ) | ||
Effect of deferred taxes
|
(1,393 | ) | ||
Other
|
(70 | ) | ||
Net cash provided by operating activities
|
15,736 | |||
Cash flows from investing activities:
|
||||
Acquisition of business, net of cash acquired
|
(75,000 | ) | ||
Capital expenditures
|
(6,989 | ) | ||
Additions to capitalized software
|
(1,433 | ) | ||
Net cash used by investing activities
|
(83,422 | ) | ||
Cash flows from financing activities:
|
||||
Proceeds from long-term debt
|
90,000 | |||
Principal payments on long-term debt
|
(20,000 | ) | ||
Dividends paid
|
(2,057 | ) | ||
Other
|
(134 | ) | ||
Net cash provided by financing activities
|
67,809 | |||
Effect of exchange rate changes on cash and cash equivalents
|
(2,193 | ) | ||
Net decrease in cash and cash equivalents
|
(2,070 | ) | ||
Cash and cash equivalents, beginning of period
|
53,825 | |||
Cash and cash equivalents, end of period
|
$ | 51,755 |
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
|
||||||||||||
Other Selected Financial Data (Unaudited)
|
||||||||||||
(Dollars in thousands)
|
|
||||||||||||||||||||
Backlog And Entered Orders - Q1 FY 2017
|
USG
|
Test
|
Filtration
|
Technical
Packaging
|
Total
|
|||||||||||||||
Beginning Backlog - 10/1/16
|
$ | 33,744 | 83,170 | 195,801 | 19,654 | 332,369 | ||||||||||||||
Entered Orders
|
39,520 | 56,015 | 67,505 | 19,860 | 182,900 | |||||||||||||||
Sales
|
(35,556 | ) | (33,827 | ) | (58,785 | ) | (18,200 | ) | (146,368 | ) | ||||||||||
Ending Backlog - 12/31/16
|
$ | 37,708 | 105,358 | 204,521 | 21,314 | 368,901 |
D!\@'Z @,"# (4
M AT")@(O C@"00)+ E0"70)G G$">@*$ HX"F *B JP"M@+! LL"U0+@ NL"
M]0, PL#%@,A RT#. -# T\#6@-F W(#?@.* Y8#H@.N [H#QP/3 ^ #[ /Y
M! 8$$P0@!"T$.P1(!%4$8P1Q!'X$C 2:!*@$M@3$!-,$X03P!/X%#044%]@8&!A8&)P8W!D@&609J!GL&C :=
M!J\&P ;1!N,&]0<'!QD'*P<]!T\'80=T!X8'F0>L![\'T@?E!_@("P@?"#((
M1@A:"&X(@@B6"*H(O@C2".<(^PD0"24).@E/"60)>0F/":0)N@G/">4)^PH1
M"B<*/0I4"FH*@0J8"JX*Q0K<"O,+"PLB"SD+40MI"X +F NP"\@+X0OY#!(,
M*@Q##%P,=0R.#*<,P S9#/,-#0TF#4 -6@UT#8X-J0W##=X-^ X3#BX.20YD
M#G\.FPZV#M(.[@\)#R4/00]>#WH/E@^S#\\/[! )$"800Q!A$'X0FQ"Y$-<0
M]1$3$3$13Q%M$8P1JA')$>@2!Q(F$D429!*$$J,2PQ+C$P,3(Q-#$V,3@Q.D
M$\43Y10&%"<4211J%(L4K13.%/ 5$A4T%585>!6;%;T5X!8#%B86219L%H\6
MLA;6%OH7'1=!%V47B1>N%](7]Q@;&$ 891B*&*\8U1CZ&2 911EK&9$9MQG=
M&@0:*AI1&G<:GAK%&NP;%!L[&V,;BANR&]H< APJ'%(<>QRC',P<]1T>'4<=
M:AZ4'KX>Z1\3'SX?:1^4'[\?ZB 5($$@;""8(,0@\"$<
M(4@A=2&A( &YXS'DJ>8EYYWI&>J5[!'MC>\)\
M(7R!?.%]07VA?@%^8G["?R-_A'_E@$> J($*@6N!S8(P@I*"](-7@[J$'82
MA..%1X6KA@Z& G]L.^OIIO^&@_B-#YTC/Y<>H;43)
MSA1C@#H!7ZJ>(;#6/VI?^#1[QA\5/VAM;U#XA^+[NZN/$'AK6-;<37NCN-3B
MTZV6!\917:-\@?>6=LYS0!^%W[,O[3GCC]CWXUZ'\0OAWX@O?#?BKP_.)K:Z
MMVX(X+>UUGQQJ3ZC<6\
M#%H;;("K$A;G:BJJC/. *\QHH _<+_@R6^"L=[^T+\;?B=>0JEOX8\.6N@PW
M$GW8VNYS/)@]B%LER>P;WK]AY/\ @NW^Q[%(RM^T-\-0RG!']I=#^5?F)_P1
M+N8OV'_^#7W]H3XP7&VSU+Q?_;L^G7.=K.PMH],LUS[7?F8_WC7\^- 'Z4?\
M'2W[=W@W]NK_ (*+Z;??#OQ-IOBSP;X0\)V>D6FHZ?+YEK<3M+-*ZCP7_P '>?[&?PWT"'2?#O@GXF:#I=OQ%9Z=X6L+
M6WC_ -U([H*/P% 'T99?\%<_C9\1F#> ?V%_C[JEN_\ JY?$]]IGA;>.QQ<2
ML1^-:P_;D_;/N@&A_85M85/:Z^->CJX_!+=Q^M>+_!O_ (.V_P!F3XZ?%OPS
MX+T/0?BT=9\6:K;:19?:-%M(X5FGE6)"[?:CM0%@6;' !-3?MH_\'9G[+_[*
MGBZ\\.^'9O$7Q
OC3X'\%I
M\0%\?7GBGPX-;NI/[*_L\V3^?)"55?-DW(S1L5)(/RD$5O?\&SGP*7X[?\%F
M_A%%- 9[+PG/=>)[CC(C-G;R20L?I<\<5]X_\ !Q;_ ,$=?VMO^"B'_!3#
M6O&GP_\ A;<>(O NEZ'IVAZ+?GQ!I=J)HXXS-+B.:Y210+B>,HSC/0@T ?
MC[^P9^VUXO\ ^">G[3.C?%+P/(BZ]HMO=V\<4K'R+@3V\D.V51]]%9U?:>"8
MUZ=1YQ\2_B7X@^,GQ UCQ5XJU:^U[Q'X@NY+[4=0O)3)/=S.=S.S'N2?H.@X
MKUC]MW_@FU\:/^"/VK@?^#;'X#K\?O^"S'P=M)XO-L?#-Y<>)KG(R$^Q6\DT1/_;<0C\:^%:_
M:3_@S4\ :;X7^,O[0'QJUMDATOX9^#$M9)W'$"7$CW,KY]H]/;\&H ^.?^#C
M7X[+^T!_P66^-FHP3&:QT'5(O#=L-VY4%A;Q6T@'L9HYF_X%7N'_ :1_LX7
MWQK_ ."BWBGQ!9LUO+X%\":I/:7706][>(+*$Y[';-,?^ &OS3^+GQ$N_B]\
M5_$WBR_+&^\3ZM=:M<$G,GF>5N?JYK^AS_ (,E_P!G1O"_[,OQ@^*5Q"5D
M\8:_:Z!:.P_Y8V,+2N5]FDO,'WB]J /PO_9/_:N^)G_!,+]L6S\:^%[BYT7Q
MEX*U*6RU/3[@LL5ZJ2%+FQN4S\T;%2K \@@,,,H(_LK_ &!OVV?"/_!0S]E+
MPG\5O!