ESCO Announces Second Quarter Results; Reports Record Orders and Backlog

ST. LOUIS, May 4 /PRNewswire-FirstCall/ -- ESCO Technologies Inc. (NYSE: ESE) today reported its operating results for the second quarter ended March 31, 2010.

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

Second Quarter 2010 Highlights

• Net sales were $129.3 million ($242.0 million year-to-date);
• EPS was $0.22 per share ($0.24 per share year-to-date);
• Entered orders were $218.6 million ($357 million year-to-date), representing record quarterly order volume, and resulting in a book-to-bill ratio of 1.7x; and
• Backlog increased $89.3 million (27 percent) to an all-time high of $414.4 million.

Chairman’s Commentary

Vic Richey, Chairman and Chief Executive Officer, commented, “I am extremely pleased with our second quarter results, as we beat our profit, cash flow and order projections. With solid execution across all three segments, we exceeded our internal EBIT and EPS targets by more than 10 percent, and surpassed our order goals by nearly 17 percent, with Aclara being the biggest contributor to the upside.

“Following our significant first quarter orders, we realized a 58-percent increase in orders sequentially during the second quarter, resulting in year-to-date orders of $357 million. Clearly, entered orders and the record-high backlog are the highlights of our year-to-date performance. This order momentum was realized across the Company, with all three segments reflecting backlog growth since the start of the fiscal year.

“At the halfway point, I’m very comfortable with where we are in relation to meeting our full-year operating goals. My confidence in the balance of the fiscal year has been significantly bolstered by the level and mix of our shippable backlog.

“Looking forward, we remain confident in our ongoing business prospects across all segments of our business, both domestically and internationally. Our Aclara products, in particular, are well positioned on several international projects in Central America and South America as well as Asia. We expect these geographic areas to be significant contributors to our multi-year growth outlook.”

Entered Orders

Entered orders in the 2010 second quarter were $218.6 million, resulting in a book-to-bill ratio of 169 percent of sales.

Second Quarter Order Highlights:

• Aclara RF AMI gas product orders with PG&E were $19.1 million, bringing total PG&E gas project orders to 4.1 million units and $226 million, representing the entire quantity of units expected in the original contract.
• Aclara RF AMI water orders for the New York City Water project were $22.4 million, bringing total NYC water orders to $57.4 million cumulative to date.
• Aclara RF AMI water orders with San Francisco Public Utilities were $13 million.
• Aclara PLS AMI orders were $55.2 million, including $36.7 million from COOPs, $11.0 million from international customers and $7.5 million from IOUs.
• Test segment orders were $52.2 million, including an order for two large RF shielded enclosures worth over $14 million.

Significant Contracts Signed (Not in Backlog):

• 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 the City of Toronto, with orders under the contract expected to total $34 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 July 20 to stockholders of record on July 6.

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 we expect to develop into orders and sales over time. I expect the balance of 2010 to reflect 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, as well as our new product “roadmap.” 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, May 4, at 4 p.m. Central Time, to discuss the Company’s second 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 1248444).

Forward-Looking Statements

Statements in this press release regarding the likelihood, timing and size of potential international and domestic opportunities, achievement of fiscal 2010 operating goals, 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, amounts and timing of fiscal 2010 and beyond revenues, earnings, sales growth, orders, the success in capturing international AMI opportunities, the global economic recovery, 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 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; 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.