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ESCO Announces Second Quarter Fiscal 2020 Results and Provides Covid-19 Business Update

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- Net Sales Increased 5 Percent in Q2 and YTD 2020 - Q2 2020 GAAP and Adjusted EPS $0.68 - Net Debt of $50 Million, Leverage Ratio 0.92x, Liquidity of $700 Million -

St. Louis, May 06, 2020 (GLOBE NEWSWIRE) -- ESCO Technologies Inc. (ESE) (ESCO, or the Company) today reported its operating results for the second quarter ended March 31, 2020 (Q2 2020) compared to the second quarter ended March 31, 2019 (Q2 2019), and provided a COVID-19 update.

COVID-19 Update

Vic Richey, Chairman and Chief Executive Officer, commented, “The COVID-19 global pandemic has created significant and unprecedented challenges, and during these highly uncertain times, our top priority remains the health and safety of our employees, customers and suppliers, thereby securing the financial well-being of the Company and supporting business continuity.

“Over the past few months, we have implemented significant actions in an effort to ensure our employees around the world have the necessary personal safety and protection measures in place to allow our businesses to continue operating with as little disruption as possible. Our businesses have been deemed essential and remain operational, supplying our customers with vital and necessary products.

“We are fortunate to have a deep and experienced leadership team that has managed through multiple downturns in the past. Coupled with our strong balance sheet and significant financial liquidity, I’m confident that we can effectively manage through this pandemic. ESCO has faced and overcome many challenges in our 30-year history and our goal is to emerge from this extraordinary challenge as an even stronger company.

“Given our diverse portfolio of strong, durable businesses serving non-discretionary end-markets, the strength and resilience of our business model positions us to continue to support our long-term outlook.

“We have taken decisive actions to enhance our strong financial condition, while continuing to execute our long-term strategy for profitable growth. Some of the actions we’ve taken to address expected business pressures over the balance of the year, include: deferring a portion of executive compensation; reducing discretionary spending; prioritizing / minimizing capital spending; implementing hiring and salary freezes; and, increasing our focus on optimizing free cash flow.

“These operational measures are prudent steps to maintain our solid liquidity and will support our financial flexibility as we work through near-term volatility. As of March 31, 2020, we had nearly $700 million of liquidity, with $100 million in cash, net debt of approximately $50 million, and a very conservative leverage ratio of 0.92x. Additionally, we have no debt maturities nor repayment obligations coming due and payable until September 2024.

“While we are pleased with the operating performance, cash flow, entered orders and backlog of our businesses year-to-date through March 31, 2020, given the extent of the uncertainty presented by this pandemic, we are withdrawing our full-year 2020 financial guidance.

“Everyone at ESCO, including our dedicated employees, Board of Directors, and executive leadership team have displayed an amazing amount of resilience and personal commitment to serve our customers through this difficult time. I want to thank everyone for the hard work, dedication, and sacrifice they have demonstrated while working through this fight to position ESCO for the future and to drive continued success.”

Q2 2020 Earnings Report

On January 2, 2020, the Company announced that it had completed the sale of its Technical Packaging segment effective December 31, 2019 which resulted in gross cash proceeds of $191 million ($187 million purchase price plus working capital surplus) and a $77 million, or $2.93 per share net gain on the sale in Q1 2020.

The financial results presented include certain non-GAAP financial measures such as EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS, as defined within the “Non-GAAP Financial Measures” described below. Any non-GAAP financial measures presented are reconciled to their respective GAAP equivalents.

Management believes these non-GAAP financial measures are useful in assessing the ongoing operational profitability of the Company’s business segments, and therefore, allow shareholders better visibility into the Company’s underlying operations. See “Non-GAAP Financial Measures” described below.

Q2 2020 GAAP and As Adjusted EPS was $0.68 per share, with net earnings of $18 million.

Q2 2019 GAAP EPS of $0.68 per share included $0.03 per share of cost reduction charges described in prior releases. The net effect of excluding the $0.03 per share of discrete items resulted in Q2 2019 Adjusted EPS of $0.71 per share, with GAAP net earnings from continuing operations of $18 million.

Q2 2020 Adjusted EBITDA was $31.4 million, compared to Q2 2019 Adjusted EBITDA of $31.2 million.

Operating Highlights

  • Net sales increased 5 percent to $180 million in Q2 2020 compared to $171 million in Q2 2019.

  • Aerospace & Defense (A&D) segment sales increased $16 million, or 20 percent from Q2 2019, including $9 million in sales from the Globe acquisition together with strong aerospace contributions from PTI and Crissair, and higher space sales at Vacco.

  • Test sales decreased $1 million in Q2 2020 as a result of a three-week COVID-19 shutdown of its Chinese manufacturing facility in February 2020, coupled with timing delays on certain installation projects due to COVID-19 related customer closure mandates and on-site personnel restrictions at customer locations, offset by strong domestic chamber project sales.

  • USG sales decreased $5 million in Q2 2020 due to the timing of various project deliverables, and several utility customers re-aligning their short-term maintenance and spending protocols to focus on uninterrupted power delivery due to short-term electricity demand / mix changes between industrial, commercial and residential customers due to COVID-19.

  • SG&A expenses as a percent of sales decreased to 22 percent in Q2 2020, from 23 percent in Q2 2019, despite additional spending on R&D / new product development, additional sales commissions, normal cost of living adjustments, and the addition of Globe.

  • Q2 2020 amortization of intangible assets increased $1 million, or 20 percent compared to Q2 2019 as a result of the Globe acquisition being included in the Q2 2020 amounts.

  • Interest expense decreased in Q2 2020 due to the lower net debt outstanding and favorable interest rates.

  • The effective income tax rate from continuing operations (GAAP and Adjusted) was approximately 11 percent in both Q2 2020 and Q2 2019. The Q2 2020 quarterly rate was included in management’s previous guidance. Both quarterly periods were favorably impacted by various one-time tax strategies.

  • Entered orders were $246 million in Q2 2020 (book-to-bill of 1.36x), and were $466 million YTD 2020 (book-to-bill of 1.32x), resulting in an ending backlog of $565 million at March 31, 2020, an increase of $113 million, or 25 percent, from September 30, 2019.

  • Q2 2020 net cash provided by operating activities from Continuing Operations of $34 million, coupled with the cash proceeds from the sale of the Technical Packaging segment, resulted in $50 million of net debt outstanding (total borrowings, less cash on hand) at March 31 2020 and a 0.92x leverage ratio.

Chairman’s Commentary

Vic Richey, Chairman and Chief Executive Officer, commented, “The clear highlight of Q2 2020 was the strength of our A&D segment where sales increased 20 percent over prior year, with an EBIT margin of nearly 23 percent. PTI and Crissair delivered strong performance on the aerospace side and both Globe and Westland outperformed expectations on their navy / submarine platforms. A&D’s entered orders were another bright spot coming in at $156 million with a book-to-bill of 1.64x led by exceptionally strong Block V orders for the Virginia Class submarines.

“We expect to see a slowdown in commercial aerospace deliveries over the balance of the year, but it is too early in the cycle to determine the sales and EBIT impact from the current industry downturn as it relates to future build rates and airline passenger miles.

“The defense portion of A&D, both military aerospace and navy products, is expected to remain strong given its backlog coupled with the urgency of expected platform deliveries.

“Test reported another solid Quarter delivering a better than expected EBIT margin of 13.6 percent, despite lower sales resulting from the China facility’s temporary shutdown and delayed timing of installation projects caused by access limitations to customer sites due to COVID-19.

“We expect Test to remain relatively solid over the remainder of the year given the strength of its backlog and its served markets, primarily related to new communications technologies such as 5G and our medical shielding business.

“USG came in lower than expected in Q2 2020 as several utility customers deferred purchase orders and maintenance-related project deliveries so they could divert resources to more important issues such as critical power delivery given their concerns around COVID-19. Additionally, Doble’s service business is largely on hold. The order pipeline of new business remains robust, especially as it relates to cyber security solutions, and I’m pleased to report that several new products and solutions introduced at the recent Doble Conference in March have been enthusiastically received.

“We expect USG’s customer spending softness to continue for the next few months and once the utilities come out of their “summer testing protocols,” we expect the USG business to return to a more normal state.

“We improved our consolidated Q2 2020 Adjusted EBITDA and delivered a 17.4 percent EBITDA margin despite the lower contribution from our highest margin segment. Our Q2 2020 entered orders were strong as we booked $246 million of new business and grew our backlog from the start of the year by 25 percent to $565 million, which helps protect against some downside risks over the remainder of the year.

“From a liquidity perspective, we are in a really solid position given our significant cash balance and our low debt level. The divestiture of the packaging business proved to be a very timely event given that we used the proceeds to pay down a substantial portion of our outstanding debt and to reduce our leverage ratio.

“When the time is right, we plan to use a portion of this additional liquidity and substantial debt capacity to fund future acquisitions and grow our business as we continue to evaluate a robust pipeline of M&A opportunities. We are taking a prudent approach to our existing, near-term M&A opportunities, and once things settle down a bit in our targeted end-markets, we would be comfortable adding to our current portfolio during 2020.

“Despite the significant economic challenges we, and everyone else, are facing today, we plan to use the successes of the first half of 2020 and the benefit of our disciplined operating culture to attempt to minimize our risks throughout the remainder of the year. I continue to have a favorable view of our longer-term future with our goal remaining unchanged – to increase long-term shareholder value.”

Dividend Payment

Given its strong liquidity position, the Company is not changing its dividend payment plan. The next quarterly cash dividend of $0.08 per share will be paid on July 16, 2020 to stockholders of record on July 2, 2020.

Business Outlook – Including COVID-19 Impact

During Q2 2020, business disruptions related to the pandemic started to affect the Company’s operations. Given the considerable uncertainty around the extent and duration of these economic circumstances, it is difficult to predict how our future operations will be affected using our normal forecasting methodologies, therefore, the Company is suspending its previously issued fiscal year 2020 guidance.

For 2020 financial reporting, the Technical Packaging business segment’s results of operations, gain on sale, balance sheet and cash flows are reported as Discontinued Operations.

Pension Plan Termination Update

As previously announced, Management will be using a portion of the Technical Packaging divestiture proceeds to fully fund, terminate, and annuitize the defined benefit pension plan (the Plan) currently maintained by the Company. The termination is expected to be completed before the end of fiscal year 2020.

By initiating this process in November 2019, the Company was able to convert the majority of the Plan assets (equities and bonds) to Cash in January and February prior to the recent, and extraordinary market volatility, thereby avoiding a major loss in Plan asset value which would have resulted in a larger under-funding situation.

Management commented in previous releases that by annuitizing this non-strategic liability through an insurance company it could eliminate both equity market risk and interest rate volatility, thereby reducing ongoing costs and eliminating future cash payments.

The Plan was frozen in 2003 and no additional benefits have been accrued since that date.

The accounting impact of terminating and annuitizing the pension will be excluded from the calculation of Adjusted EBITDA and Adjusted EPS when terminated.

Conference Call

The Company will host a conference call today, May 6, at 4:00 p.m. Central Time, to discuss the Company’s Q2 2020 results. A live audio webcast will be available on the Company’s website at www.escotechnologies.com. Please access the website 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 on the Company’s website noted above or by phone (dial 1-855-859-2056 and enter the pass code 9211249).

Forward-Looking Statements

Statements in this press release regarding the future impacts of COVID-19 on the Company’s results, the financial success of the Company, the strength of its end markets, including without limitation the anticipated slowdown in commercial aerospace, actions in regard to the Company’s frozen defined benefit plan, the ability to increase shareholder value, the success of acquisition efforts, the use of proceeds from the recent divestiture, the long-term success of the Company, and any other 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 them except as may be required by applicable laws or regulations. 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 those described in Item 1A, “Risk Factors”, of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019, in Item 8.01 of the Company’s Form 8-K filed May 6, 2020, and the following: impacts arising from COVID-19 including without limitation labor shortages due to illness, shelter in place policies or quarantines, material shortages, transportation delays, delays or termination of Company contracts, the inability of our suppliers to perform, weakening of economic conditions in served markets; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; delivery delays or defaults by customers; material changes in the costs and availability of certain raw materials; the appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts; the timing and content of future contract awards or customer orders; performance issues with key customers, suppliers and subcontractors; labor disputes; the impacts of natural disasters on the Company’s operations and those of the Company’s customers and suppliers; changes in laws and regulations, including but not limited to changes in accounting standards, taxation requirements, and new or modified tariffs; changes in interest rates; costs relating to environmental matters arising from current or former facilities; financial exposure in connection with the Company’s guarantee of a former Aclara lease; the availability of select acquisitions; and the uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration.

Non-GAAP Financial Measures

The financial measures EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS are presented in this press release. The Company defines “EBIT” as earnings before interest and taxes, “EBITDA” as earnings before interest, taxes, depreciation and amortization, “Adjusted EBITDA” as EBITDA excluding certain defined charges, and “Adjusted EPS” as GAAP earnings per share (EPS) excluding the net impact of the items described above which were $0.02 per share in YTD 2020.

EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes that EBIT, EBITDA and Adjusted EBITDA are useful in assessing the operational profitability of the Company’s business segments because they exclude interest, taxes, depreciation and amortization, which are generally accounted for across the entire Company on a consolidated basis. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The presentation of EBIT, EBITDA, Adjusted EBITDA and Adjusted EPS provides important supplemental information to investors by facilitating comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. The use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP.

ESCO, headquartered in St. Louis, Missouri: Manufactures highly-engineered filtration and fluid control products for the aviation, navy, space and process markets worldwide, as well as composite-based products and solutions for navy, defense and industrial customers; is the industry leader in RF shielding and EMC test products; and provides diagnostic instruments, software and services for the benefit of industrial power users and the electric utility and renewable energy industries. Further information regarding ESCO and its subsidiaries is available on the Company’s website at www.escotechnologies.com.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share amounts)

Three Months
Ended
March 31,
2020

Three Months
Ended
March 31,
2019

Net Sales

$

180,492

171,243

Cost and Expenses:

Cost of sales

113,242

103,547

Selling, general and administrative expenses

39,982

39,327

Amortization of intangible assets

5,220

4,371

Interest expense

1,320

1,853

Other expenses (income), net

703

2,022

Total costs and expenses

160,467

151,120

Earnings before income taxes

20,025

20,123

Income tax expense

2,203

2,301

Earnings from continuing operations

17,822

17,822

Earnings from discontinued operations, net of tax

expense of $257

-

975

Gain on sale of discontinued operations

-

-

Earnings from discontinued operations

-

975

Net earnings

$

17,822

18,797

Diluted EPS:

Diluted - GAAP

Continuing operations

$

0.68

0.68

Discontinued operations

0.00

0.04

Net earnings

$

0.68

0.72

Diluted - As Adjusted Basis

Continuing operations

$

0.68

0.71

(1

)

Diluted average common shares O/S:

26,088

26,036

(1

)

Q2 FY 19 Adjusted EPS excludes $0.03 per share of after-tax charges incurred primarily at Doble, PTI and VACCO during the second quarter of fiscal 2019.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share amounts)

Six Months
Ended
March 31,
2020

Six Months
Ended
March 31,
2019

Net Sales

$

352,220

334,608

Cost and Expenses:

Cost of sales

219,969

206,001

Selling, general and administrative expenses

82,087

77,867

Amortization of intangible assets

11,030

8,771

Interest expense

3,741

3,708

Other expenses (income), net

998

(5,357

)

Total costs and expenses

317,825

290,990

Earnings before income taxes

34,395

43,618

Income tax expense

5,809

8,446

Earnings from continuing operations

28,586

35,172

(Loss) earnings from discontinued operations, net

of tax expense of $269 and $52

(601

)

942

Gain on sale of discontinued operations, net of

tax expense of $23,734

76,614

-

Earnings from discontinued operations

76,013

942

Net earnings

$

104,599

36,114

Diluted EPS:

Diluted - GAAP

Continuing operations

$

1.09

1.34

Discontinued operations

2.91

0.04

Net earnings

$

4.00

1.38

Diluted - As Adjusted Basis

Continuing operations

$

1.11

(1

)

1.17

(2

)

Diluted average common shares O/S:

26,126

26,078

(1

)

YTD Q2 FY 20 Adjusted EPS excludes $0.02 per share of after-tax charges primarily related to the move of the Doble headquarters facility.

(2

)

YTD Q2 FY 19 Adjusted EPS excludes $0.17 per share of after-tax income mainly resulting from the gain on the sale of the Doble Watertown property partially offset by certain restructuring charges primarily at Doble, PTI and VACCO.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Business Segment Information (Unaudited)

(Dollars in thousands)

GAAP

As Adjusted

Q2 2020

Q2 2019

Q2 2020

Q2 2019

Net Sales

Aerospace & Defense

$

95,124

79,478

95,124

79,478

Test

41,600

42,875

41,600

42,875

USG

43,768

48,890

43,768

48,890

Totals

$

180,492

171,243

180,492

171,243

EBIT

Aerospace & Defense

$

21,736

17,443

21,736

17,806

Test

5,651

5,554

5,651

5,554

USG

4,866

8,767

4,866

9,241

Corporate

(10,908

)

(9,788

)

(10,908

)

(9,679

)

Consolidated EBIT

21,345

21,976

21,345

22,922

Less: Interest expense

(1,320

)

(1,853

)

(1,320

)

(1,853

)

Less: Income tax expense

(2,203

)

(2,301

)

(2,203

)

(2,516

)

Net earnings from cont ops

$

17,822

17,822

17,822

18,553

Note 1: Adjusted net earnings were $18.5 million in Q2 FY 19 which excluded $0.03 per share of after-tax charges related to the restructuring charges incurred at Doble, PTI and VACCO during the second quarter of 2019.

EBITDA Reconciliation to Net earnings from continuing operations:

Adjusted

Adjusted

Q2 2020

Q2 2019

Q2 2020

Q2 2019

Consolidated EBITDA

$

31,388

30,259

31,388

31,205

Less: Depr & Amort

(10,043

)

(8,283

)

(10,043

)

(8,283

)

Consolidated EBIT

21,345

21,976

21,345

22,922

Less: Interest expense

(1,320

)

(1,853

)

(1,320

)

(1,853

)

Less: Income tax expense

(2,203

)

(2,301

)

(2,203

)

(2,516

)

Net earnings from cont ops

$

17,822

17,822

17,822

18,553

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Business Segment Information (Unaudited)

(Dollars in thousands)

GAAP

As Adjusted

YTD Q2

YTD Q2

YTD Q2

YTD Q2

2020

2019

2020

2019

Net Sales

Aerospace & Defense

$

172,635

145,702

172,635

145,702

Test

82,983

84,161

82,983

84,161

USG

96,602

104,745

96,602

104,745

Totals

$

352,220

334,608

352,220

334,608

EBIT

Aerospace & Defense

$

34,249

28,053

34,319

28,513

Test

10,307

8,864

10,307

8,864

USG

14,153

30,313

14,773

23,100

Corporate

(20,573

)

(19,904

)

(20,573

)

(19,430

)

Consolidated EBIT

38,136

47,326

38,826

41,047

Less: Interest expense

(3,741

)

(3,708

)

(3,741

)

(3,708

)

Less: Income tax

(5,809

)

(8,446

)

(5,975

)

(6,716

)

Net earnings from cont ops

$

28,586

35,172

29,110

30,623

Note 1: Adjusted net earnings were $29.1 million in YTD Q2 FY 20 which excluded $0.02 per share of after-tax charges related primarily to the facility move at Doble.

Note 2: Adjusted net earnings were $30.6 million in YTD Q2 FY 19 which excluded $0.17 per share of after-tax income primarily related to the Q1 FY 19 gain on the sale of the Doble Watertown facility partially offset by charges related to other restructuring actions at Doble, PTI and VACCO.

EBITDA Reconciliation to Net earnings from continuing operations:

Adjusted

Adjusted

YTD Q2

YTD Q2

YTD Q2

YTD Q2

2020

2019

2020

2019

Consolidated EBITDA

$

58,719

64,163

59,409

57,884

Less: Depr & Amort

(20,583

)

(16,837

)

(20,583

)

(16,837

)

Consolidated EBIT

38,136

47,326

38,826

41,047

Less: Interest expense

(3,741

)

(3,708

)

(3,741

)

(3,708

)

Less: Income tax expense

(5,809

)

(8,446

)

(5,975

)

(6,716

)

Net earnings from cont ops

$

28,586

35,172

29,110

30,623

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

March 31,
2020

September 30,
2019

Assets

Cash and cash equivalents

$

100,195

61,808

Accounts receivable, net

157,050

158,715

Contract assets

96,100

110,211

Inventories

141,027

124,956

Other current assets

17,228

14,190

Assets of discontinued operations-current

-

25,314

Total current assets

511,600

495,194

Property, plant and equipment, net

139,248

127,843

Intangible assets, net

371,779

381,605

Goodwill

389,630

390,256

Operating lease assets

18,901

-

Other assets

10,421

4,445

Assets of discontinued operations-other

-

67,377

$

1,441,579

1,466,720

Liabilities and Shareholders' Equity

Current maturities of long-term debt

$

20,000

20,000

Accounts payable

53,617

63,800

Contract liabilities

95,382

81,177

Other current liabilities

82,030

75,141

Liabilities of discontinued operations-current

-

11,517

Total current liabilities

251,029

251,635

Deferred tax liabilities

61,690

60,856

Non-current operating lease liabilities

15,010

-

Other liabilities

57,643

59,008

Long-term debt

130,000

265,000

Liabilities of discontinued operations-other

-

3,999

Shareholders' equity

926,207

826,222

$

1,441,579

1,466,720

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

Six Months
Ended
March 31, 2020

Cash flows from operating activities:

Net earnings

$

104,599

Earnings from discontinued operations

(76,013

)

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Depreciation and amortization

20,583

Stock compensation expense

2,896

Changes in assets and liabilities

(16,247

)

Effect of deferred taxes

834

Net cash provided by continuing operations

36,652

Net cash used by discontinued operations

(14,622

)

Cash flows from investing activities:

Capital expenditures

(21,211

)

Additions to capitalized software

(4,280

)

Net cash used by investing activities - continuing operations

(25,491

)

Proceeds from sale of discontinued operations

183,997

Capital expenditures - discontinued operations

(1,728

)

Net cash provided by investing activities - discontinued operations

182,269

Net cash provided by investing activities

156,778

Cash flows from financing activities:

Proceeds from long-term debt

10,000

Principal payments on long-term debt

(145,000

)

Dividends paid

(4,156

)

Net cash used by financing activities - continuing operations

(139,156

)

Net cash used by financing activities - discontinued operations

(2,140

)

Net cash used by financing activities

(141,296

)

Effect of exchange rate changes on cash and cash equivalents

875

Net increase in cash and cash equivalents

38,387

Cash and cash equivalents, beginning of period

61,808

Cash and cash equivalents, end of period

$

100,195

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Other Selected Financial Data (Unaudited) -- Continuing Operations Basis

(Dollars in thousands)

Backlog And Entered Orders - Q2 FY 2020

Aerospace
& Defense

Test

USG

Total

Beginning Backlog - 1/1/20

$

327,784

130,701

41,785

500,270

Entered Orders

155,984

41,787

47,845

245,616

Sales

(95,124

)

(41,600

)

(43,768

)

(180,492

)

Ending Backlog - 3/31/20

$

388,644

130,888

45,862

565,394

Backlog And Entered Orders - YTD Q2 FY 2020

Aerospace
& Defense

Test

USG

Total

Beginning Backlog - 10/1/19

$

276,273

133,571

41,715

451,559

Entered Orders

285,006

80,300

100,749

466,055

Sales

(172,635

)

(82,983

)

(96,602

)

(352,220

)

Ending Backlog - 3/31/20

$

388,644

130,888

45,862

565,394

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (Unaudited)

EPS – Adjusted Basis Reconciliation – YTD Q2 FY 20

EPS from Continuing Ops – GAAP Basis – YTD Q2 FY 20

$

1.09

Adjustments (defined below)

0.02

EPS from Continuing Ops – As Adjusted Basis – YTD Q2 FY 20

$

1.11

Adjustments exclude $0.02 per share consisting of move costs associated with the

Doble facility consolidation in the first six months of 2020.

(The $0.02 of EPS adjustments per share consists of $690K of pre-tax charges

offset by $166K of tax benefit for net impact of $524K.)

EPS – Adjusted Basis Reconciliation – Q2 FY 19

EPS from Continuing Ops – GAAP Basis – Q2 FY 19

$

0.68

Adjustments (defined below)

0.03

EPS from Continuing Ops – As Adjusted Basis – Q2 FY 19

$

0.71

Adjustments exclude $0.03 per share consisting of restructuring charges

related to Doble, PTI & VACCO during the second quarter of 2019.

(The $0.03 of EPS adjustments per share consists of $946K of pre-tax charges

offset by $215K of tax benefit for net impact of $731K.)

EPS – Adjusted Basis Reconciliation – YTD Q2 FY 19

EPS from Continuing Ops – GAAP Basis – YTD Q2 FY 19

$

1.34

Adjustments (defined below)

(0.17

)

EPS from Continuing Ops – As Adjusted Basis – YTD Q2 FY 19

$

1.17

Adjustments exclude $0.17 per share consisting of income related to the

gain on sale of the Doble Watertown property partially offset by certain

restructuring charges at Doble, PTI & VACCO in the first six months of 2019.

(The $0.17 of EPS adjustments per share consists of $6.3 million of pre-tax

income offset by $1.7 million of tax expense for net impact of $4.6 million.)


SOURCE ESCO Technologies Inc.
Kate Lowrey, Director of Investor Relations, (314) 213-7277