Business Segment Information

12 Months Ended

Sep. 30, 2017

Segment Reporting, Measurement Disclosures [Abstract]

13.

Business Segment Information

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

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 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 Technical Packaging segment’s operations consist of Thermoform Engineered Quality LLC (TEQ) and Plastique. 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,	2017		2016		2015
Filtration	$	279.5		207.8		196.7
Test		160.9		161.5		177.6
USG		162.4		127.8		123.6
Technical Packaging		82.9		74.4		39.4
Consolidated totals	$	685.7		571.5		537.3

No customer exceeded 10% of sales in 2017 or 2016.

EBIT

(Dollars in millions)
Year ended September 30,	2017		2016		2015
Filtration	$	52.2		45.2		41.7
Test		19.5		13.9		9.5
USG		36.6		31.1		29.6
Technical Packaging		8.5		9.6		4.9
Reconciliation to consolidated totals (Corporate)		(32.1)		(30.1)		(23.4)
Consolidated EBIT		84.7		69.7		62.3
Less: interest expense		(4.6)		(1.3)		(0.8)
Earnings before income tax	$	80.1		68.4		61.5

Identifiable Assets

(Dollars in millions)
Year ended September 30,	2017		2016
Filtration	$	194.2		143.5
Test		132.2		110.9
USG		175.5		85.4
Technical Packaging		47.1		40.9
Corporate – Goodwill		377.9		323.6
Corporate – Other assets		333.5		274.1
Consolidated totals	$	1,260.4		978.4

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

Capital Expenditures

(Dollars in millions)
Year ended September 30,	2017		2016		2015
Filtration	$	10.2		3.3		5.0
Test		4.5		3.3		3.1
USG		7.6		3.3		3.3
Technical Packaging		7.4		3.9		1.0
Corporate		–		–		–
Consolidated totals	$	29.7		13.8		12.4

In addition to the above amounts, the Company incurred expenditures for capitalized software of $9.0 million, $8.7 million and $6.9 million in 2017, 2016 and 2015, respectively.

Depreciation and Amortization

(Dollars in millions)
Year ended September 30,	2017		2016		2015
Filtration	$	6.6		4.0		3.8
Test		3.6		3.6		3.1
USG		9.8		8.1		6.2
Technical Packaging		3.5		2.9		1.4
Corporate		8.7		5.0		4.1
Consolidated totals	$	32.2		23.6		18.6

Depreciation expense of property, plant and equipment was $15.9 million, $11.9 million and $9.7 million for 2017, 2016 and 2015, respectively.

Geographic Information

Net Sales

(Dollars in millions)
Year ended September 30,	2017		2016		2015
United States	$	503.1		403.6		385.5
Asia		69.8		68.1		70.4
Europe		75.4		71.6		46.6
Canada		22.2		12.9		11.6
India		4.8		2.9		4.3
Other		10.4		12.4		18.9
Consolidated totals	$	685.7		571.5		537.3

Long-Lived Assets

(Dollars in millions)
Year ended September 30,	2017		2016
United States	$	111.5		79.9
Europe		16.8		11.7
Other		4.4		0.8
Consolidated totals	$	132.7		92.4

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