ESCO Announces First Quarter Results

ST. LOUIS, Feb. 4 /PRNewswire-FirstCall/ -- ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the first fiscal quarter ended December 31, 2009.

EPS is presented from “Continuing Operations” and “Discontinued Operations”. Fiscal 2009 discontinued operations include the results of Comtrak which was sold in March 2009.

First Quarter 2010 Highlights

• Net sales were $112.7 million;
• EPS was $0.02 per share;
• Gross margin percentage (sales, less cost of sales, divided into sales) was 40.2 percent;
• Cash flow from operating activities was $5.2 million;
• Net debt outstanding was $129.6 million at December 31, 2009 (2.0x leverage ratio);
• Entered orders were $138.4 million, (book-to-bill ratio of 1.23x); and
• Backlog increased $25.7 million (9 percent) to an all-time high of $325.1 million.

Chairman’s Commentary

Vic Richey, Chairman and Chief Executive Officer, commented, “I am pleased with our first quarter results, as we beat our original profit, cash flow and order expectations. We anticipated net earnings and EPS at break-even, but as a result of solid execution on several fronts, particularly within the Utility Solutions Group and Filtration segments, we exceeded our EBIT goals by nearly $2 million, with Doble being the biggest contributor.

“The most important highlight of the quarter was the strength of entered orders and the resulting record high backlog. Strong order activity was realized across all three operating segments, which reinforces that we are taking the appropriate actions when it comes to investing in new products, enhancing existing products and servicing our customers with innovative solutions.

“We made meaningful progress toward meeting our annual operating goals by capturing several large water AMI projects, as well as booking $26 million of initial AMI deployment orders with two significant international customers in Latin America. We continue to be enthused with our business prospects in Central and South America, and, as these international projects begin to deploy Aclara products, we expect they will be significant contributors to our multi-year growth outlook.

“While the government’s Stimulus Program continues to cause delays of some expected orders and sales, we remain confident that once the money is distributed to the utilities we will benefit from this program over the balance of the year and well into the future.

“I am confident that given our new products, the strength and size of our domestic and international business prospects and acquisition opportunities, we are well-positioned for the future.”

Entered Orders

Entered orders in the 2010 first quarter were $138.4 million, resulting in a book-to-bill ratio of 123 percent of sales.

First Quarter Order / Contract Highlights:

• Aclara RF AMI gas product orders with PG&E were $7.4 million during the first quarter, bringing total PG&E gas project orders to 3.7 million units and $207 million.
• Aclara PLS AMI orders were $38.4 million, including approximately $26 million of international business in Mexico and Colombia.
• Test segment orders were $37.1 million, including several large chamber orders.

Significant Contracts / Orders Received Subsequent to December 31:

• Aclara RF AMI water contract signed with San Francisco Public Utilities Commission in November 2009, with a $13 million purchase order received in January 2010.
• Aclara RF AMI water contract with Toho Water Authority in Florida with orders under the contract expected to total $9 million.
• Aclara RF AMI water contract with City of Toronto with orders under the contract expected to total $34 million.
• Aclara RF AMI water orders for the New York City Water project worth $17.3 million.
• Test segment order for two large shielded enclosures worth over $14 million.

Business Outlook

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.

Dividend Payment

The next quarterly cash dividend of $0.08 per share will be paid on April 20 to stockholders of record on April 5.

FY 2010

Management’s expectations for fiscal year 2010 remain consistent with the Business Outlook discussions noted in the Company’s Earnings Release dated November 12, 2009.

As noted earlier, Management decided to defer providing specific 2010 guidance due to the significant size and uncertain timing of the numerous projects in which the Company is currently engaged. Combined with the impact of the global economic recovery, Management believes the specific financial impact and timing of these large projects will be more quantifiable in the future, and therefore believes it is prudent to defer providing specific EPS guidance at this time.

Chairman’s Commentary – Wrap-Up

Mr. Richey concluded, “We continue to have a sizeable amount of specific, identifiable growth opportunities that should develop into orders and sales in varying degrees throughout fiscal 2010. I expect 2010 to be a year of significant activity as many of these projects materialize and firmly set us up for meaningful growth in sales and earnings over the next few years. I remain very optimistic about our current business prospects, both domestically and internationally. Our commitment remains the same, to achieve our long-term goal of increasing shareholder value.”

Conference Call

The Company will host a conference call today, February 4, at 4 p.m. Central Time, to discuss the Company’s first quarter fiscal 2010 operating results. A live audio webcast will be available on the Company’s web site at www.escotechnologies.com. Please access the web site 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 web site noted above or by phone (dial 1-888-203-1112 and enter the pass code 8614240).

Forward-Looking Statements

Statements in this press release regarding the likelihood, timing and size of potential international and domestic opportunities, projects and contracts which the Company may receive or participate in, expected total orders to be received under significant Company contracts and orders described herein, the likelihood and timing of benefits resulting from the government’s Stimulus Program, amounts and timing of fiscal 2010 future revenues, earnings, sales growth, orders, growth, the success in capturing international AMI opportunities, the global economic recovery, the Company’s ability to complete acquisitions, success of new products and technologies, the long-term success of the Company, and any other written or oral 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, 2009; the effect of the American Recovery and Reinvestment Act of 2009; the success of the Company’s competitors; changes in Federal or State energy laws; the timing and content of purchase order releases under the Company’s Gas AMI contract with PG&E; the Company’s successful performance of its AMI contracts; site readiness issues with Test segment customers; weakening of economic conditions in served markets; the availability and pricing of acquisition targets, 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 of certain raw materials including steel and copper; delivery delays or defaults by customers; 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.

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 web site at www.escotechnologies.com.

SOURCE ESCO Technologies Inc.