ESCO Technologies Inc. Reports Operating Results (10-Q)
Esco Technologies Inc. has a market cap of $855.54 million; its shares were traded at around $32.38 with a P/E ratio of 17.5 and P/S ratio of 1.38. The dividend yield of Esco Technologies Inc. stocks is 0.99%. GuruFocus rated Esco Technologies Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:Net sales decreased $27.0 million, or 30.6%, to $61.2 million for the first quarter of 2010 from $88.1 million for the first quarter of 2009. The sales decrease in the first quarter of 2010 as compared to the prior year quarter was mainly due to a $22.5 million decrease in net sales from Aclara RF primarily due to lower Advanced Metering Infrastructure (AMI) product deliveries at Pacific Gas & Electric (PG&E) of $23.7 million, partially offset by increased shipments of additional water AMI products for the New York City water project of $4.1 million; and a $5.4 million decrease in net sales from Aclara PLS primarily due to lower sales to the COOP market; partially offset by a $0.9 million increase in net sales from Doble.
For the first quarter of 2010, net sales of $27.0 million were $8.5 million, or 23.9%, lower than the $35.5 million of net sales recorded in the first quarter of 2009. The sales decrease for the three month period ended December 31, 2009 as compared to the prior year quarter was mainly due to: a $5.4 million decrease in net sales from the segment s U.S. operations driven by the timing of domestic chamber deliveries, and a $2.8 million decrease in net sales from the segment s Asian operations due to the timing of large chamber deliveries in Japan.
Backlog was $325.1 million at December 31, 2009 compared with $299.4 million at September 30, 2009. The Company received new orders totaling $138.4 million in the first quarter of 2010 compared to $139.5 million in the prior year first quarter. New orders of $74.3 million were received in the first quarter of 2010 related to USG products, $37.1 million related to Test products, and $27.0 million related to Filtration products. New orders of $84.9 million were received in the first quarter of 2009 related to USG products, $29.9 million related to Test products, and $24.7 million related to Filtration products.
Amortization of intangible assets was $2.9 million and $4.6 million for the three-month periods ended December 31, 2009 and 2008, respectively. Amortization of intangible assets for the three-month periods ended December 31, 2009 and 2008 included $1.2 million and $1.2 million, respectively, of amortization of acquired intangible assets related to recent acquisitions. The amortization of these acquired intangible assets is included in Corporate s operating results; see “EBIT – Corporate”. During the three-month periods ended December 31, 2009 and 2008, the Company recorded $1.1 million and $2.9 million, respectively, of amortization related to Aclara PLS TWACS NG™ software. 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 $2.0 million decrease in amortization of its TWACS NG software in the first quarter of 2010.
Working capital (current assets less current liabilities) decreased to $108.9 million at December 31, 2009 from $116.2 million at September 30, 2009. Accounts receivable decreased by $24.7 million in the first quarter of 2010, of which $21.4 million related to the USG segment and $3.6 million related to the Filtration segment, both driven by timing and volume of sales and increased cash collections. Inventories increased by $6.5 million in the first quarter of 2010 primarily related to an increase of $4.2 million in the USG segment and $2.8 million in the Test segment to meet forecasted sales for the remainder of 2010.
At December 31, 2009, the Company had $197.2 million available to borrow comprised of: approximately $147.2 million available under the credit facility, plus a $50.0 million increase option, in addition to $35.4 million cash on hand. At December 31, 2009, the Company had $170 million of outstanding borrowings under the credit facility and outstanding letters of credit of $12.8 million. The Company classified $50 million as the current portion on long-term debt as of December 31, 2009, as the Company intends to repay this amount within the next twelve months; however, the Company has no contractual obligation to repay such amount during the next twelve months. Cash flow from operations and borrowings under the Company s bank credit facility are expected to meet the Company s capital requirements and operational needs for the foreseeable future. On January 12, 2010, the Company entered into an amendment to the credit agreement, with retroactive effect to November 12, 2009, to permit the Company to declare and pay dividends. The first quarterly dividend of $0.08 per share was paid on January 19, 2010 to stockholders of record as of January 4, 2010.
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