Business Segment Information

12 Months Ended

Sep. 30, 2023

Business Segment Information

Business Segment Information

9.      Business Segment Information

We are organized based on the products and services we offer, and we classify our continuing business operations in three reportable segments for financial reporting purposes: Aerospace & Defense (A&D), Utility Solutions Group (USG) and RF Test & Measurement, formerly called RF Shielding and Test (Test). In addition, for reporting certain financial information we treat Corporate activities as a separate segment.

The A&D segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Globe Composite Solutions, LLC (Globe), Westland Technologies, Inc. (Westland), and Mayday Manufacturing Co. (Mayday). The companies within this segment primarily design and manufacture specialty filtration, fluid control and naval products, including hydraulic filter elements and fluid control devices used in aerospace and defense applications, unique filter mechanisms used in micro-propulsion devices for satellites, custom designed filters for manned aircraft and submarines, products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, and other communications, sealing, surface control and hydrodynamic related applications to enhance U.S. Navy maritime survivability; precision-tolerance machined components for the aerospace and defense industry; metal processing services; and miniature electro-explosive devices utilized in mission-critical defense and aerospace applications.

The USG segment’s operations consist of Doble Engineering Company and related subsidiaries including Morgan Schaffer and Altanova (collectively, Doble), and NRG Systems, Inc. (NRG). Doble is an industry leader in the development, manufacture and delivery of diagnostic testing and data management solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment. It combines three core elements for customers – diagnostic test and condition monitoring instruments, expert consulting, and testing services – and provides access to its large reserve of related empirical knowledge. NRG is a global market leader in the design and manufacture of decision support tools for the renewable energy industry, primarily wind and solar. The acquisition of Altanova not only complements our existing products and services but its strong market presence in Europe and Asia provides a significant international platform for our USG segment.

The Test segment’s operations consist of ETS-Lindgren Inc. and related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in designing and manufacturing products and systems to measure and control RF and acoustic energy. It serves the acoustics, medical, health and safety, electronics, wireless communications, automotive and defense markets, supplying a broad range of turnkey systems, including RF test facilities and measurement systems, acoustic test enclosures, RF and magnetically shielded rooms, and secure communication facilities, and providing the design, program management, installation and integration services required to successfully complete these types of facilities. It also supplies a broad range of components including RF absorptive materials, filters, antennas, field probes, test cells, proprietary measurement software and other test accessories required to perform a variety of tests and measurements, and offers a variety of services including calibration and product tests.

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.

We evaluate the performance of our 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. 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,	2023		2022	2021
A&D	$	392.4	351.4	314.8
USG		342.3	278.4	202.9
Test		221.3	227.7	197.7
Consolidated totals	$	956.0	857.5	715.4

No customer exceeded 10% of consolidated sales in 2023, 2022 or 2021.

EBIT

(Dollars in millions)
Year ended September 30,	2023		2022	2021
A&D	$	71.6	68.4	56.5
USG		76.7	57.6	40.9
Test		32.4	32.6	27.6
Reconciliation to consolidated totals (Corporate)		(53.0)	(47.3)	(42.1)
Consolidated EBIT		127.7	111.3	82.9
Less: interest expense		(8.8)	(4.9)	(2.2)
Earnings before income tax	$	118.9	106.4	80.7

Identifiable Assets

(Dollars in millions)
Year ended September 30,	2023		2022
A&D	$	354.7	295.2
USG		254.9	220.0
Test		167.6	174.6
Corporate		906.0	964.7
Consolidated totals	$	1,683.2	1,654.5

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

Capital Expenditures

(Dollars in millions)
Year ended September 30,	2023		2022	2021
A&D	$	12.9	9.4	10.4
USG		4.9	14.4	11.6
Test		4.5	8.3	4.7
Corporate		0.1	—	—
Consolidated totals	$	22.4	32.1	26.7

In addition to the above amounts, we incurred expenditures for capitalized software of $12.4 million, $12.9 million and $8.8 million in 2023, 2022 and 2021, respectively.

Depreciation and Amortization

(Dollars in millions)
Year ended September 30,	2023		2022	2021
A&D	$	12.6	11.1	10.4
USG		14.0	12.6	13.5
Test		5.3	5.4	5.2
Corporate		18.6	19.2	12.9
Consolidated totals	$	50.5	48.3	42.0

Depreciation expense of property, plant and equipment was $21.6 million, $22.4 million and $21.2 million for 2023, 2022 and 2021, respectively.

Geographic Information

Net Sales

(Dollars in millions)
Year ended September 30,	2023		2022	2021
United States	$	665.4	603.2	517.0
Asia		116.3	132.7	104.7
Europe		90.4	72.4	53.5
Canada		46.8	31.2	27.0
Other		37.1	18.0	13.2
Consolidated totals	$	956.0	857.5	715.4

Long-Lived Assets

(Dollars in millions)
Year ended September 30,	2023		2022
United States	$	141.9	141.5
Canada		4.3	4.9
Mexico		2.4	5.8
Other		6.9	3.8
Consolidated totals	$	155.5	156.0

We attribute net sales to countries based on the location of the customer. We attribute long-lived assets to countries based on the location of the asset.