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ESCO Technologies Inc. Reports Operating Results (10-Q)

August 06, 2010 | About:
10qk

10qk

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ESCO Technologies Inc. (ESE) filed Quarterly Report for the period ended 2010-06-30.

Esco Technologies Inc. has a market cap of $889.2 million; its shares were traded at around $33.62 with a P/E ratio of 21.7 and P/S ratio of 1.5. The dividend yield of Esco Technologies Inc. stocks is 1%. Esco Technologies Inc. had an annual average earning growth of 12.7% over the past 10 years. GuruFocus rated Esco Technologies Inc. the business predictability rank of 2.5-star.ESE is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Columbia Wanger of Columbia Wanger Asset Management, Pioneer Investments, Paul Tudor Jones of The Tudor Group.

Highlight of Business Operations:

Net sales increased $0.6 million, or approximately 1.0%, to $91.7 million for the third quarter of 2010 from $91.1 million for the third quarter of 2009. Net sales decreased $48.4 million, or 17.7%, to $225.0 million for the first nine months of 2010 from $273.4 million in the prior year period. The sales increase during the quarter ended June 30, 2010 as compared to the prior year quarter was mainly due to: an $8.4 million increase in net sales from Aclara PLS primarily due to higher shipments to the Puerto Rico Electric Power Authority (PREPA) and a $2.4 million increase in net sales from Doble; partially offset by a $9.7 million decrease in net sales from Aclara RF primarily due to lower Advanced Metering Infrastructure (AMI) product deliveries at Pacific Gas & Electric (PG&E) as the project nears completion. The sales decrease in the first nine months of 2010 as compared to the prior year period was mainly due to a $54.7 million decrease in net sales from Aclara RF primarily due to lower AMI product deliveries at PG&E of approximately $50.0 million.

For the third quarter of 2010, net sales of $34.6 million were $5.5 million, or 18.9%, higher than the $29.1 million of net sales recorded in the third quarter of 2009. Net sales decreased $5.2 million, or 5.3%, to $93.1 million in the first nine months of 2010 from $98.3 million in the first nine months of 2009. The sales increase for the three-month period ended June 30, 2010 as compared to the prior year quarter was mainly due to: a $2.4 million increase in net sales from the segment s U.S. operations driven by increases in revenue related to large chambers; a $1.9 million increase in net sales from the segment s European operations due to the shipment of a large military project; and a $1.2 million increase in net sales from the segment s Asian operations mainly driven by an increase in shipments in India. The sales decrease for the first nine months of 2010 compared to the prior year period was due to: an $5.7 million decrease in net sales from the segment s U.S. operations and a $2.8 million decrease in net sales from the segment s Asian operations both driven by a decline in market conditions resulting in a decrease in small test and measurement projects; partially offset by a $3.3 million increase in net sales from the segment s European operations mainly due to an improvement in the European medical business and the shipment of a large military project, mentioned above.

For the third quarter of 2010, net sales of $31.3 million were $3.4 million, or 12.2%, higher than the $27.9 million of net sales recorded in the third quarter of 2009. Net sales increased $3.6 million, or 4.6%, to $81.5 million for the first nine months of 2010 from $77.9 million for the first nine months of 2009. The sales increase during the quarter ended June 30, 2010 as compared to the prior year quarter was mainly due to a $1.8 million increase in net sales at PTI driven by higher shipments of aerospace elements; and a $0.7 million increase in net sales at VACCO driven by higher shipments of space products. The sales increase for the first nine months of 2010 as compared to the prior year period was mainly due to: a $1.6 million increase in net sales at VACCO and a $1.0 million increase at PTI for the reasons mentioned above.

Backlog was $406.8 million at June 30, 2010 compared with $299.4 million at September 30, 2009. The Company received new orders totaling $150.0 million in the third quarter of 2010 compared to $157.6 million in the prior year third quarter. New orders of $88.6 million were received in the third quarter of 2010 related to USG products, $30.3 million related to Test products, and $31.1 million related to Filtration products. New orders of $103.6 million were received in the third quarter of 2009 related to USG products, $32.8 million related to Test products, and $21.2 million related to Filtration products.

Amortization of intangible assets was $2.9 million and $8.7 million for the three and nine-month periods ended June 30, 2010, respectively, compared to $4.8 million and $14.4 million for the respective prior year periods. Amortization of intangible assets for the three and nine-month periods ended June 30, 2010 included $1.2 million and $3.5 million, respectively, of amortization of acquired intangible assets related to recent acquisitions compared to $1.2 million and $3.5 million for the respective prior year periods. The amortization of these acquired intangible assets is included in Corporate s operating results; see “EBIT – Corporate”. During the three and nine-month periods ended June 30, 2010, the Company recorded $1.1 million and $3.3 million, respectively, of amortization related to Aclara PLS TWACS NG™ software compared to $3.1 million and $9.1 million for the respective prior year periods. The remaining amortization expenses consist of other identifiable intangible assets (primarily software, patents and licenses). Beginning in the first quarter of 2010, the Company re-evaluated the economic useful life of its TWACS NG capitalized software and concluded the remaining TWACS NG asset value has an expected remaining useful life of ten years resulting in a $6.0 million decrease in amortization of its TWACS NG software in the first nine months of 2010.

Corporate costs included in EBIT were $5.9 million and $17.2 million for the three and nine-month periods ended June 30, 2010, respectively, compared to $5.4 million and $16.8 million for the respective prior year periods. In the first nine months of 2010, Corporate costs included $3.0 million of pretax stock compensation expense and $3.5 million of pretax amortization of acquired intangible assets. In the first nine months of 2009, Corporate costs included $3.2 million of pretax stock compensation expense and $3.5 million of pretax amortization of acquired intangible assets. There were no significant fluctuations in Corporate costs in the third quarter and first nine months of 2010 as compared to the respective prior year periods.

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10qk
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