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

May 07, 2010 | About:
10qk

10qk

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ESCO Technologies Inc. (ESE) filed Quarterly Report for the period ended 2010-03-31.

Esco Technologies Inc. has a market cap of $815.2 million; its shares were traded at around $30.83 with a P/E ratio of 16.7 and P/S ratio of 1.3. The dividend yield of Esco Technologies Inc. stocks is 1.1%. 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.

Highlight of Business Operations:

Net sales decreased $22.1 million, or 23.5% to $72.0 million for the second quarter of 2010 from $94.1 million for the second quarter of 2009. Net sales decreased $49.1 million or 26.9% to $133.2 million for the first six months of 2010 from $182.3 million in the prior year period. The sales decrease in the second 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 approximately $17.0 million as the project nears completion. The sales decrease in the first six months of 2010 as compared to the prior year period was due to a $45.0 million decrease in net sales from Aclara RF primarily due to lower AMI product deliveries at PG&E of approximately $40.0 million.

For the second quarter of 2010, net sales of $31.6 million were $2.1 million, or 6.2%, lower than the $33.7 million of net sales recorded in the second quarter of 2009. Net sales decreased $10.6 million, or 15.3% to $58.6 million in the first six months of 2010 from $69.2 million in the first six months of 2009. The sales decrease for the three-month period ended March 31, 2010 as compared to the prior year quarter was mainly due to: a $2.7 million decrease in net sales from the segment s U.S. operations driven by decreases in shipments of large chambers; a $1.1 million decrease in net sales from the segment s Asian operations due to a decline in market conditions in Japan resulting in a decrease in large chamber deliveries; partially offset by a $1.7 million increase in net sales from the segment s European operations due to an increase in chamber deliveries at ETS-Finland and a favorable foreign currency impact of approximately $0.5 million. The sales decrease for the first six months of 2010 compared to the prior year period was due to: an $8.1 million decrease in net sales from the segment s U.S. operations; a $4.0 million decrease in net sales from the segment s Asian operations; partially offset by a $1.5 million increase in net sales from the segment s European operations, all for the reasons mentioned above.

For the second quarter of 2010, net sales of $25.7 million were $0.7 million, or 2.7% lower than the $26.4 million of net sales recorded in the second quarter of 2009. Net sales increased $0.2 million to $50.2 million for the first six months of 2010 from $50.0 million for the first six months of 2009. The sales decrease during the quarter ended March 31, 2010 as compared to the prior year quarter was mainly due to a $0.7 million decrease in net sales at PTI driven by lower shipments of aerospace assemblies. The sales increase for the first six months of 2010 as compared to the prior year period was mainly due to: a $0.9 million increase in net sales at VACCO driven by higher military / defense aircraft product shipments, partially offset by a $0.8 million decrease at PTI as mentioned above.

Backlog was $414.4 million at March 31, 2010 compared with $299.4 million at September 30, 2009. The Company received new orders totaling $218.6 million in the second quarter of 2010 compared to $156.7 million in the prior year second quarter. New orders of $141.0 million were received in the second quarter of 2010 related to USG products, $52.2 million related to Test products, and $25.3 million related to Filtration products. New orders of $97.3 million were received in the second quarter of 2009 related to USG products, $26.0 million related to Test products, and $33.4 million related to Filtration products.

Amortization of intangible assets was $2.9 million and $5.8 million for the three and six-month periods ended March 31, 2010, respectively, compared to $5.0 million and $9.6 million for the respective prior year periods. Amortization of intangible assets for the three and six-month periods ended March 31, 2010 included $1.2 million and $2.3 million, respectively, of amortization of acquired intangible assets related to recent acquisitions compared to $1.2 million and $2.4 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 six-month periods ended March 31, 2010, the Company recorded $1.1 million and $2.2 million, respectively, of amortization related to Aclara PLS TWACS NG™ software compared to $3.1 million and $6.0 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 $4.0 million decrease in amortization of its TWACS NG software in the first six months of 2010.

Working capital (current assets less current liabilities) decreased to $108.2 million at March 31, 2010 from $116.2 million at September 30, 2009. Accounts receivable decreased by $14.2 million in the first six months of 2010, of which $12.2 million related to the USG segment and $3.2 million related to the Filtration segment, both driven by timing and volume of sales and increased cash collections. Inventories increased by $7.3 million in the first six months of 2010 primarily related to an increase of $5.4 million in the USG segment and $2.0 million in the Test segment to meet forecasted sales for the remainder of 2010. Accounts payable decreased by $18.2 million in the first six months of 2010 mainly related to a $16.2 million decrease in the USG segment due to the timing of payments to suppliers.

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