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ESCO Announces First Quarter 2012 Results
Feb 07, 2012 (03:02 PM EST)
ST. LOUIS, Feb. 7, 2012 /PRNewswire/ -- ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the first quarter ended December 31, 2011.
Vic Richey, Chairman and Chief Executive Officer, commented, "First quarter sales, EBIT and EPS all exceeded our original projections anticipated at the start of the year. The most satisfying aspect of the quarter was the significant volume of entered orders across all three segments and the resulting $51 million increase in backlog. The $33 million SoCalGas order, the additional PG&E gas business, and the better-than-expected COOP orders certainly were highlights of the quarter.
"While it was disappointing that we used cash in the quarter, it was primarily timing-related, as a few large customer payments expected in late December weren't received until the first week of January. We are on track with our cash flow projections year-to-date.
"With the PG&E gas, New York City water, and CFE (Mexico) projects winding down throughout 2011, coupled with the incremental SG&A investments we are making, we fully expected first quarter sales and EPS to be lower than the prior year. In spite of the wind-down from these three large contracts, we nearly overcame this headwind with strong sales in Filtration, Test and at Doble.
"Filtration had an exceptional quarter and is nearing a 20 percent EBIT margin, and Doble continues to outperform our expectations coming in with an EBIT margin of nearly 24 percent, in spite of the additional investments in SG&A. I continue to be excited about our prospects for 2012 and remain convinced that our three-segment strategy is the appropriate course of action, and I believe that our first quarter results validate this approach."
First Quarter 2012 Highlights
Statements contained in the preceding and following paragraphs are based on current expectations. Statements that are not strictly historical are considered forward-looking, and actual results may differ materially.
The next quarterly cash dividend of $0.08 per share will be paid on April 20 to stockholders of record on April 6.
Fiscal Years 2012 / 2013
Consistent with the Outlook communicated in the November 8, 2011 earnings release, Management's expectations for fiscal years 2012 and 2013 include the following assumptions:
Chairman's Commentary – 2012 / 2013
Mr. Richey concluded, "After reviewing our current operating plans for the remainder of the year, I remain confident about our 2012 sales and EPS outlook. Additionally, we remain fully committed to our previous expectations of significant sales and EPS growth for 2013 and beyond. I am enthusiastic about our future as I see meaningful growth opportunities across all three segments.
"My perspective remains the same as in November: We expect our near-term growth projections to be led by the largest AMI gas project in North America, supplemented by our international opportunities at Aclara and Doble, and complemented by our expected domestic growth across all three operating segments.
"Our commitment remains the same − to achieve our long-term goal of increasing shareholder value."
The Company will host a conference call today, February 7, at 4 p.m. Central Time, to discuss the Company's first quarter fiscal 2012 operating results. A live audio webcast will be available on the Company's website at www.escotechnologies.com. Please access the website at least 15 minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available for seven days on the Company's website noted above or by phone (dial 1-888-203-1112 and enter the pass code 6392450).
Statements in this press release regarding the amount and timing of the Company's expected 2012 and beyond revenues, EPS, sales, orders, cash flow, investments, the size and success of the SoCalGas AMI project, the size, number and timing of growth opportunities in the future, success in capturing international and domestic opportunities, development and success of new products and technologies, the long-term success of the Company, and any other statements which are not strictly historical are "forward-looking" statements within the meaning of the safe harbor provisions of the federal securities laws. Investors are cautioned that such statements are only predictions and speak only as of the date of this release, and the Company undertakes no duty to update. The Company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment including, but not limited to: the risk factors described in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2011; changes in requirements of SoCalGas; SoCalGas' ability to successfully negotiate appropriate terms and conditions with other subcontractors and project participants; the performance of SoCalGas employees, vendors and other participants in connection with project responsibilities; the Company's successful performance of the SoCalGas agreement; financial constraints impacting SoCalGas; the receipt of necessary regulatory approvals pertaining to the SoCalGas project; the impact that recent flooding in Thailand may have on the availability of components utilized by Aclara; the success of the Company's competitors; changes in federal or state energy laws; the Company's successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; unforeseen charges impacting corporate operating expenses; the performance of the Company's international operations; material changes in the costs and availability of certain raw materials including steel and copper; worldwide availability of electronic components; termination for convenience of customer contracts; timing and magnitude of future contract awards; containment of engineering and development costs; performance issues with key customers, suppliers and subcontractors; labor disputes; changes in laws and regulations, including but not limited to changes in accounting standards and taxation requirements; costs relating to environmental matters; uncertainty of disputes in litigation or arbitration; and the Company's successful execution of internal operating plans.
Non-GAAP Financial Measures
The financial measures EBIT and EBIT margin are presented in this press release. The Company defines EBIT as earnings before interest and taxes from continuing operations, and EBIT margin as a percent of net sales. EBIT and EBIT margin are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that EBIT and EBIT margin are useful in assessing the operational profitability of the Company's business segments because they exclude interest and taxes, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by management in determining resource allocations within the Company as well as incentive compensation. The Company believes that the presentation of EBIT and EBIT margin provides important supplemental to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.
ESCO, headquartered in St. Louis, is a proven supplier of special purpose utility solutions for electric, gas, and water utilities, including hardware and software to support advanced metering applications and fully automated intelligent instrumentation. In addition, the Company provides engineered filtration products to the aviation, space, and process markets worldwide and is the industry leader in RF shielding and EMC test products. Further information regarding ESCO and its subsidiaries is available on the Company's website at www.escotechnologies.com.
SOURCE ESCO Technologies Inc.