Business Segment Information

12 Months Ended

Sep. 30, 2019

Business Segment Information

Business Segment Information

13.      Business Segment Information

The Company is organized based on the products and services it offers, and classifies its business operations in four reportable segments for financial reporting purposes: Filtration/Fluid Flow (Filtration), Utility Solutions Group (USG), RF Shielding and Test (Test) and Technical Packaging.

The Filtration segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Mayday Manufacturing Co. (Mayday), Hi-Tech Metals, Inc. (Hi-Tech), Westland Technologies, Inc. (Westland), and Globe Composite Solutions, LLC (Globe). PTI, VACCO and Crissair design and manufacture specialty filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications, unique filter mechanisms used in micro-propulsion devices for satellites and custom designed filters for manned aircraft and submarines. Mayday designs and manufactures mission-critical bushings, pins, sleeves and precision-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industries. Hi-Tech is a full-service metal processor offering aerospace OEM’s and Tier 1 suppliers, a large portfolio of processing services including anodizing, cadmium and zinc-nickel plating, organic coatings, non-destructive testing, and heat treatment. Westland designs, develops and manufactures elastomeric-based signature reduction solutions for U.S. naval vessels.

Globe supplies navy, defense, and industrial customers with mission-critical composite-based products and solutions for acoustic, signature-reduction, communications, sealing, vibration-reducing, surface control, and hydrodynamic-related applications.

The USG segment’s operations consist of Doble Engineering Company and related subsidiaries (Doble), Morgan Schaffer Ltd. (Morgan Schaffer), and NRG Systems, Inc. (NRG). Doble provides high-end, intelligent diagnostic test solutions for the electric power delivery industry and is a leading supplier of power factor and partial discharge testing instruments used to assess the integrity of high-voltage power delivery equipment. Morgan Schaffer provides an integrated offering of dissolved gas analysis, oil testing, and data management solutions which enhance the ability of electric utilities to accurately monitor the health of critical power transformers. NRG designs and manufactures decision support tools for the renewable energy industry, primarily wind.

The Test segment's operations consist of ETS-Lindgren Inc. and related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in providing its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy. ETS-Lindgren also manufactures radio frequency shielding products and components used by manufacturers of medical equipment, communications systems, electronic products, and shielded rooms for high-security data processing and secure communication.

The Technical Packaging segment’s operations consist of Thermoform Engineered Quality LLC (TEQ), Plastique Limited and Plastique sp. z o.o. The companies within this segment provide innovative solutions to the medical and commercial markets for thermoformed and precision molded pulp fiber packages and specialty products using a wide variety of thin gauge plastics and pulp.

Accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements. The operating units within each reporting segment have been aggregated because of similar economic characteristics and meet the other aggregation criteria of FASB ASC 280.

The Company evaluates the performance of its operating units based on EBIT, which is defined as earnings before interest and taxes. EBIT on a consolidated basis is a non-GAAP financial measure; see “Non-GAAP Financial Measures” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Intersegment sales and transfers are not significant. Segment assets consist primarily of customer receivables, inventories, capitalized software and fixed assets directly associated with the production processes of the segment. Segment depreciation and amortization is based upon the direct assets listed above.

Net Sales

(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	325.8	286.8	279.5
USG		211.9	214.0	162.4
Test		188.4	182.9	160.9
USG		—
Technical Packaging		86.9	87.9	82.9
Consolidated totals	$	813.0	771.6	685.7

No customer exceeded 10% of sales in 2019 or 2018.

EBIT

(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	70.1	58.7	52.2
USG		52.2	43.2	36.6
Test		25.6	23.8	19.5
USG		—
Technical Packaging		5.9	8.1	8.5
Reconciliation to consolidated totals (Corporate)		(43.2)	(37.0)	(32.1)
Consolidated EBIT		110.6	96.8	84.7
Less: interest expense		(8.4)	(8.8)	(4.6)
Earnings before income tax	$	102.2	88.0	80.1

Identifiable Assets

(Dollars in millions)
Year ended September 30,	2019		2018
Filtration	$	260.3	204.7
USG		190.0	176.9
Test		154.2	138.3
USG		—
Technical Packaging		59.1	50.9
Corporate – Goodwill		409.2	381.7
Corporate – Other assets		393.9	312.6
Consolidated totals	$	1,466.7	1,265.1

Corporate assets consist primarily of goodwill, deferred taxes, acquired intangible assets and cash balances.

Capital Expenditures

(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	11.7	7.0	10.2
USG		8.5	5.2	7.6
Test		4.0	3.0	4.5
USG		—
Technical Packaging		13.0	5.4	7.4
Corporate		—	—	—
Consolidated totals	$	37.2	20.6	29.7

In addition to the above amounts, the Company incurred expenditures for capitalized software of $8.4 million, $9.5 million and $9.0 million in 2019, 2018 and 2017, respectively.

Depreciation and Amortization

(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	8.3	7.6	6.6
USG		11.3	11.0	9.8
Test		5.1	4.5	3.6
USG		—
Technical Packaging		4.1	4.1	3.5
Corporate		11.3	10.6	8.7
Consolidated totals	$	40.1	37.8	32.2

Depreciation expense of property, plant and equipment was $20.6 million, $19.4 million and $15.9 million for 2019, 2018 and 2017, respectively.

Geographic Information

Net Sales

(Dollars in millions)
Year ended September 30,	2019		2018	2017
United States	$	583.0	536.7	503.1
Asia		88.3	94.5	69.8
Europe		82.8	85.0	75.4
Canada		33.2	30.3	22.2
India		11.7	9.4	4.8
Other		14.0	15.7	10.4
Consolidated totals	$	813.0	771.6	685.7

Long-Lived Assets

(Dollars in millions)
Year ended September 30,	2019		2018
United States	$	140.0	113.2
Europe		16.6	17.1
Other		4.9	4.7
Consolidated totals	$	161.5	135.0

Net sales are attributed to countries based on location of customer. Long-lived assets are attributed to countries based on location of the asset.