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ESCO Technologies Inc.$83.55$.14.17%

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 ESCO Announces Fiscal 2016 Results
   Monday, November 14, 2016 4:15:23 PM ET

GAAP EPS - From Continuing Operations $1.77; EPS - As Adjusted $2.03

ST. LOUIS, November 14, 2016 - ESCO Technologies Inc. (ESE ) (ESCO or the Company) today reported its operating results for the fourth quarter (Q4 2016) and fiscal year ended September 30, 2016 (2016), compared to the fourth quarter (Q4 2015) and fiscal year ended September 30, 2015 (2015).

Management previously announced certain 2016 restructuring actions which were described and quantified in the Company’s October 8, 2015 and November 12, 2015 releases. The costs associated with these restructuring actions were excluded from Management’s 2016 quarterly and full year earnings guidance communicated at the start of the year. Throughout 2016, Management quantified these costs in its quarterly earnings reports when presenting its operating results on an EPS - As Adjusted basis, and reconciled these amounts to their respective EPS - GAAP equivalents.

By excluding the restructuring charges when discussing the 2016 non-GAAP financial measures, Management believes EPS - As Adjusted is more representative of the Company’s ongoing performance and allows shareholders better visibility into the Company’s underlying operations.

EPS Summary

- 2016 EPS - As Adjusted was $2.03 per share, compared to $1.59 per share in 2015;

- 2016 GAAP EPS from continuing operations was $1.77 per share and $1.59 per share in 2015;

- Q4 2016 EPS - As Adjusted was $0.67 per share, compared to $0.50 per share in Q4 2015; and,

- Q4 2016 GAAP EPS from continuing operations was $0.65 per share and $0.50 per share in Q4 2015.

Previous Management guidance for 2016 EPS - As Adjusted was $1.95 to $2.02 per share, with Q4 2016 EPS - As Adjusted in the range of $0.59 to $0.66 per share. 2016 actual results came in higher than previous guidance as Filtration, led by higher commercial aerospace earnings, and Doble both exceeded previous earnings expectations.

EPS - As Adjusted excludes after-tax charges of $0.6 million, or $0.02 per share in Q4 2016, and $7.0 million, or $0.26 per share in 2016 related to the previously described restructuring actions, which were completed as of September 30, 2016.

Operating Highlights - 2016

- 2016 sales increased $34 million (6 percent) to $571 million compared to $537 million in 2015;

- 2016 Filtration sales increased $11 million (aerospace sales increased $10 million, or 9 percent, and VACCO sales increased $1 million, or 2 percent), Technical Packaging sales increased $35 million (Plastique added $22 million in sales and TEQ sales increased $13 million), Test sales decreased $16 million (due to the timing of large chamber projects in the respective periods), and USG sales increased $4 million (higher sales of software, services, and new products, partially offset by lower legacy hardware);

- Consolidated gross margins were 39 and 38 percent in 2016 and 2015, respectively;

- Despite the addition of the Fremont, Plastique, and Westland acquisitions, 2016 SG&A increased by only $1 million compared to 2015. The additional SG&A costs related to these acquisitions were mitigated by a lower cost structure at Test and Doble, lower operating costs in Filtration, partially offset by higher Corporate spending on professional fees;

- Other (income) expenses, net, increased in 2016 due to the restructuring costs at Test and Doble;

- The effective tax rate was 32.9 percent in 2016 compared to 32.2 percent in 2015;

- 2016 EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $93 million as reported, and $101 million As - Adjusted, compared to $81 million as reported in 2015;

- 2016 orders were $576 million compared to $562 million in 2015, which resulted in an ending backlog of $332 million at September 30, 2016; and,

- Net debt (outstanding borrowings less cash on hand) at September 30, 2016 was $56 million, reflecting additional borrowings for the 2016 acquisitions and spending on share repurchases.

Share Repurchases

During 2016, the Company spent $4.3 million to repurchase approximately 120,000 of its outstanding shares in the open market.

In support of Management’s formal capital allocation policy, over the past three years (2014 through 2016), the Company returned approximately $60 million to shareholders by distributing $25 million in cash dividends and spending $35 million to repurchase approximately one million of its outstanding shares in the open market.

The Company’s share repurchase authorization extends through September 30, 2017, and Management expects to continue to opportunistically repurchase its shares under this authorization.

2016 Restructuring Actions

The 2016 restructuring actions were completed as of September 30, 2016, with cumulative costs incurred of $7.8 million pretax, $7.0 million after tax, and $0.26 per share.

Chairman’s Commentary - 2016

Vic Richey, Chairman and Chief Executive Officer, commented, "I’m pleased with the way we ended 2016 by delivering operating results above our initial expectations, and by successfully executing several key strategic initiatives we established at the beginning of the year.

"Throughout 2016, we were driven by four significant goals:

- We set our original EPS - As Adjusted targets at $1.90 to $2.00 per share, and subsequently increased those targets to $1.95 to $2.02 per share with the acquisition of Plastique. It was our goal to deliver, or exceed, these expectations;

- During each quarterly earnings call, we defined our expectations with the goal of demonstrating consistency and predictability within our diversified, multi-segment operating structure, which reduces volatility and provides stable earnings;

- Given our 2016 cost reduction / restructuring initiatives impacting Test and Doble, our goal set at the beginning of the year was that when completed, these efforts would benefit future EBIT margins by a meaningful amount; and,

- We implemented an aggressive, yet disciplined, acquisition strategy to supplement our organic growth and provide profit protection to mitigate economic softness across the global industrial landscape.

"I’m thrilled with the way our entire Company came together collectively to deliver what is arguably the best year in ESCO’s history. Our EPS - As Adjusted was $2.03 per share in 2016, which despite numerous industrial market challenges, exceeded expectations for the year, and for every fiscal quarter during the year.

"We completed our challenging restructuring actions well under budget and on time, and I’m very proud of our staff for the way they respectfully and professionally accomplished this very difficult task.

"On the acquisition front, I’m extremely pleased with the way our M&A strategy played out this year. Beginning with Fremont, followed by Plastique in mid-year, and wrapping up the year with Westland, I’m ecstatic with the addition of each of these teams. These deals were done with a structured and disciplined approach with a continued focus on our ROIC goals. The Management teams we’ve added are a strong complement to the teams we have throughout the company. As we head into 2017, the November addition of Mayday and Hi-Tech furthers our aerospace growth objectives.

"We plan to build on the success we achieved in 2016 and continue to have a favorable view of our future with our goal remaining the same - to increase long-term shareholder value."

Dividend Payment

The next quarterly cash dividend of $0.08 per share will be paid on January 19, 2017 to stockholders of record on January 4, 2017.

Acquisition Update - 2017

On November 7, 2016, the Company acquired industry leading aerospace suppliers, Mayday Manufacturing Co. (Mayday) and its affiliate, Hi-Tech Metals, Inc. (Hi-Tech) which operate together in a state-of-the-art, expandable 130,000 square foot facility in Denton, Texas. Mayday and Hi-Tech will be included in the Company’s Filtration operating segment beginning in 2017.

Mayday is a market leading manufacturer of mission-critical bushings, pins, sleeves and precise-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industry.

Hi-Tech is a full-service metal processor offering a vast portfolio of unique and challenging processing services to aerospace OEM’s and Tier 1 suppliers. Hi-Tech’s capabilities include anodizing, cadmium and zinc-nickel plating, organic coatings, non-destructive testing, and heat treatment.

The Company is continuing to evaluate additional opportunities and Management remains confident that it will be successful in closing additional acquisitions to support future growth.

Business Outlook - 2017

Management continues to see meaningful sales, EBIT, EBITDA, and EPS growth across each of the Company’s business segments and anticipates growth rates in 2017 and beyond that exceed the Company’s defined peer group and the broader industrial market.

The details of Management’s growth expectations for 2017 (compared to 2016 As - Adjusted) are as follows:

- Sales are expected to increase between 18 percent and 20 percent, resulting in projected sales in the range of $675 million to $685 million, with all operating segments reflecting meaningful increases;

- Gross profit dollars are expected to be negatively impacted by a one-time non-cash pretax charge of $3 million or $0.08 per share after-tax, related to Mayday’s inventory "step up";

- EBIT dollars are expected to increase greater than 18 percent due to the sales increase, despite the purchase accounting charge;

- EBITDA is expected to increase between 21 percent and 23 percent, resulting in EBITDA in the range of $122 million and $124 million, compared to 2016 EBITDA As - Adjusted of $101 million;

- Interest expense on higher net debt resulting from recent acquisitions and share repurchases is expected to increase to $3.6 million, up from the $1.3 million expense reported in 2016;

- Non-cash depreciation and amortization of intangibles is expected to increase approximately $9 million, pretax, or ($0.22 per share after-tax) as a result of the recent acquisitions;

- 2017 income tax expense is expected to increase as Management is projecting a 35 percent effective tax rate calculated on higher pretax earnings, as compared to the 32.9 percent tax rate in 2016; and,

- In summary, Management projects 2017 EPS to be in the range of $2.16 to $2.26 per share, including the impact of the inventory "step up" charge of $0.08 per share expected to be incurred in the first half of 2017, and the $0.22 per share impact of additional depreciation and amortization.

Management’s 2017 operating segment expectations are presented in summary fashion:

- Filtration sales are expected to increase over 35 percent with EBIT margins (excluding inventory "step up" charges at Mayday) similar to 2016. The significant increase in sales and EBIT is driven by the additions of Westland and Mayday, the continued strength of the commercial aerospace market, and significantly higher space (SLS) sales at VACCO;

- Technical Packaging sales are expected to increase over 17 percent with EBIT margins in the low-to-mid teens. The sales increase is driven by Plastique being included for the full year, partially offset by a temporary (3 month) slowdown of KAZ deliveries at TEQ as the customer rationalizes its current inventory in Q1 2017;

- Test sales are expected to increase in the high single digits with EBIT margins near 13 percent. The sales increase is driven by the catch up from 2016 delayed orders being received and with projects ultimately being delivered in 2017. The EBIT margin increase reflects the lower cost structure resulting from the 2016 restructuring and other operating improvements implemented;

- Doble sales are expected to increase in the mid-to-high single digits with EBIT margins consistent with 2016’s As - Adjusted EBIT margin of 26 percent. The sales increase reflects higher software and service revenues, and flat to slightly higher hardware revenues driven by an expectation of a modest recovery in utility customer capital spending; and,

- Corporate costs are expected to be higher due to additional non-cash amortization of purchase accounting intangible assets resulting from the recent acquisitions.

On a quarterly basis, Management expects 2017 operating results to reflect a profile similar to 2016 and previous years, with revenues and EPS being more second-half weighted. As with past years, projected Q4 2017 sales and EPS are expected to be the strongest/highest of the fiscal year.

Management expects Q1 2017 EPS to be in the range of $0.35 to $0.40 per share, which reflects one half of the impact of the $3 million, or $0.08 per share, of pretax purchase accounting charges noted above. Additionally, the timing of sales and related earnings within the respective quarters also impacts Q1 comparative EPS.

Chairman’s Commentary - 2017

Mr. Richey continued, "The sales, EBIT, EBITDA and EPS growth we are expecting in 2017 puts us in a solid position to meet our shareholder value-creation goals, and to date, our share price appreciation has validated our strategy.

The sales, EBITDA, and EPS growth we are projecting in 2017 is expected to outperform the majority of our industrial peers and the overall industrial market.

"In 2016, we established a solid foundation with our operating results and, coupled with our recent acquisitions, I remain confident in our ability to meet our longer-term financial goals. We are well-positioned for continued growth, and with us now realizing the benefits of our lower operating cost structure, I’m confident that this will provide us an opportunity to further increase our operating margins and improve our competitive position across our various end-markets.

"I firmly believe our market leadership positions and the breadth and diversity of our new product offerings will allow us to continue to grow at levels above our peer and industry averages.

"We continue to see opportunities to supplement this organic growth through accretive acquisitions, and we remain committed to our longer-term growth targets and EPS goals."

Conference Call

The Company will host a conference call today, November 14, at 4:00 p.m. Central Time, to discuss the Company’s 2016 results and 2017 outlook. 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 for seven days on the Company’s website noted above or by phone (dial 1-855-859-2056 and enter the pass code 91075521).

Forward-Looking Statements

Statements in this press release regarding the Company’s expected quarterly and 2017 full year operating results, revenue and sales growth, EPS, EPS growth, EBIT, EBIT margins, EBITDA, gross profit, interest expense, non-cash depreciation and amortization of intangibles, corporate costs, effective tax rates, the Company’s ability to increase operating margins, realize financial goals and increase shareholder value, the success of acquisition efforts, the size, number and timing of future sales and growth opportunities, share repurchases, 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, 2015, and the following: the success of the Company’s competitors; 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; delivery delays or defaults by customers; the performance of the Company’s international operations; material changes in the costs and availability of certain raw materials; the appropriation and allocation of Government funds; the termination for convenience of Government and other customer contracts; the timing and content of future contract awards or customer orders; containment of engineering and development costs; 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 and taxation requirements; costs relating to environmental matters arising from current or former facilities; financial exposure in connection with Company guarantees of certain Aclara contracts; the availability of select acquisitions; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the Company’s successful execution of cost reduction and profit improvement initiatives.

Non-GAAP Financial Measures

The financial measures EBIT, EBIT margin, Adjusted EBIT margin, EBITDA, and EPS - As Adjusted are presented in this press release. The Company defines "EBIT" as earnings before interest and taxes from continuing operations, "EBIT margin" as EBIT expressed as a percent of net sales, "Adjusted EBIT margin" as EBIT excluding the 2016 restructuring charges expressed as a percent of net sales, "EBITDA" as earnings before interest, taxes, depreciation and amortization, and "EPS - As Adjusted" as GAAP earnings per share (EPS) excluding the restructuring charges described above which were $0.02 per share for Q4 2016 and $0.26 per share for 2016.

EBIT, EBIT margin, Adjusted EBIT margin, EBITDA and EPS - As Adjusted are not recognized in accordance with U.S. generally accepted accounting principles (GAAP). However, Management believes that EBIT, EBIT margin, and 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. Adjusted EBIT margin excludes the 2016 impact of the ETS and Doble restructuring charges. EBIT is also one of the measures used by Management in determining resource allocations within the Company as well as incentive compensation. The Company believes that the presentation of EBIT, EBIT margin, Adjusted EBIT margin, EBITDA, and EPS - As Adjusted 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. A reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is included in the attached tables.

ESCO, headquartered in St. Louis: Manufactures highly-engineered filtration and fluid control products for the aviation, space and process markets worldwide; is the industry leader in RF shielding and EMC test products; provides diagnostic instruments, software and services for the benefit of the electric utility industry and industrial power users; and, produces custom thermoformed packaging, pulp based packaging, and specialty products for medical and commercial markets. 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                               Three Months
                                                                                                                      Ended                                                         Ended
                                                                                                                      September 30,                                                 September 30,
                                                                                                                      2016                                                          2015
                                                                   
Net Sales                                                                              $                              159,505                                    153,612
Cost and Expenses:                                                                                                          
  Cost of sales                                                                 96,038                                     99,131
  Selling, general and administrative expenses                                                     34,304                                     30,945
  Amortization of intangible assets                                             3,090                                      2,472
  Interest expense                                                              391                                        130
  Other expenses (income), net                                                  1,365                                      1,357
              Total costs and expenses                       135,188                                    134,035
                                                                   
Earnings before income taxes                                                                       24,317                                     19,577
Income taxes                                                                                       7,402                                      6,594
                                                                   
              Net earnings                       $                              16,915                                     12,983
                                                                   
                                                                   
              Diluted EPS - GAAP                 $                              0.65                                       0.50
                                                                   
              Diluted EPS - As Adjusted          $                              0.67                           (1)                            0.50
                                                                   
                                                                   
              Diluted average common shares O/S:             25,935                                     26,191
                                                                   
(1)                  As Adjusted excludes $0.6 million (or $0.02 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during the fourth quarter of fiscal 2016.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
 (Dollars in thousands, except per share amounts)
 
             Year Ended                                                                                                                                                             Year Ended
                                                                                                            September                                                                                                                                                                                                    September
                                                                                                            30, 2016                                                                                                                                                                                                     30, 2015
                                                                                                                                                                  
Net Sales                                                           $                    571,459                                                                                                                                                                537,291
Cost and Expenses:                                                                                                                                                                                                                            
  Cost of sales                                                       350,807                                                                                                                                                                334,850
  Selling, general and administrative expenses                        131,493                                                                                                                                                                130,166
  Amortization of intangible assets                                   11,630                                                                                                                                                                 8,850
  Interest expense                                                    1,308                                                                                                                                                                  785
  Other expenses (income), net                                        7,801                                                                                                                                                                  1,119
    Total costs and expenses                       503,039                                                                                                                                                                475,770
                                                                                                                                                                  
Earnings before income taxes                                                             68,420                                                                                                                                                                 61,521
Income taxes                                                                             22,538                                                                                                                                                                 19,785
                                                                                                                                                                  
    Net earnings from continuing operations        45,882                                                                                                                                                                 41,736
                                                                                                                                                                  
Earnings from discontinued operations, net of tax                                                                                                                                                                                             
  expense of $390                                                           -        776
    Net earnings                                 $                    45,882                                                                                                                                                                 42,512
                                                                                                                                                                  
    Diluted EPS - GAAP                                                                                                                                                                                  
      Continuing operations   $                    1.77                                                                                                                                                                   1.59
      Discontinued operations   0.00                                                                                                                                                                   0.03
      Net earnings              1.77                                                                                                                                                                   1.62
                                                                                                                                                                  
    Diluted EPS - As Adjusted                    $                    2.03                                                                                                                                                               (1)                    1.59
                                                                                                                                                                  
                                                                                                                                                                  
    Diluted average common shares O/S:             25,968                                                                                                                                                                 26,265
                                                                                                                                                                  
(1)                  As Adjusted excludes $6.9 million (or $0.26 per share) of previously announced adjustments for restructuring charges incurred at ETS & Doble during fiscal 2016.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)
 
              GAAP                                                               Q4 2016   As Adjusted
                                                                                                                                                                              Adjustments
                                                                                                                                                                              (1)
              Q4 2016                Q4 2015                            Q4 2016                Q4 2015
Net Sales                                                                                       
  Filtration                                      $                    61,994                 57,399                             61,994                 57,399
  Test                                              41,903                 53,161                             41,903                 53,161
  USG                                               34,129                 30,667                             34,129                 30,667
  Technical Packaging                               21,479                 12,385                             21,479                 12,385
    Totals                     $                    159,505                153,612                            159,505                153,612
                                       
EBIT                                                      
  Filtration                                      $                    15,716                 12,978                             15,716                 12,978
  Test                                              5,276                  2,467                  424                            5,700                  2,467
  USG                                               9,502                  7,448                  308                            9,810                  7,448
  Technical Packaging                               2,590                  2,172                              2,590                  2,172
  Corporate                                         (8,376)                (5,358)                106                            (8,270)                (5,358)
    Consolidated EBIT            24,708                 19,707                 838                            25,546                 19,707
    Less: Interest expense       (391)                  (130)                              (391)                  (130)
    Less: Income tax expense     (7,402)                (6,594)                (215)                          (7,617)                (6,594)
    Net earnings from cont ops $                    16,915                 12,983                 623                            17,538                 12,983
                                       
Note:                Depreciation and amortization expense was $6.4 million and $5.0 million for the quarters ended September 30, 2016 and 2015, respectively.
                                       
(1)                  Adjustments consist of $0.6 million (or $0.02 per share) of restructuring charges at ETS & Doble during the fourth quarter of 2016.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information (Unaudited)
(Dollars in thousands)
 
              GAAP                                                               FY 2016   As Adjusted
                                                                                                                                                                              Adjustments
                                                                                                                                                                              (1)
                                       
              FY 2016                FY 2015                            FY 2016                FY 2015
Net  Sales                                                                   
  Filtration                                      $                    207,752                196,671                            207,752                196,671
  Test                                              161,512                177,611                            161,512                177,611
  USG                                               127,785                123,556                            127,785                123,556
  Technical Packaging                               74,410                 39,453                             74,410                 39,453
    Totals                     $                    571,459                537,291                            571,459                537,291
                                       
EBIT                                                      
  Filtration                                      $                    45,227                 41,686                             45,227                 41,686
  Test                                              13,863                 9,540                  5,139                          19,002                 9,540
  USG                                               31,083                 29,637                 2,228                          33,311                 29,637
  Technical Packaging                               9,625                  4,875                              9,625                  4,875
  Corporate                                         (30,070)               (23,432)               434                            (29,636)               (23,432)
    Consolidated EBIT            69,728                 62,306                 7,801                          77,529                 62,306
    Less: Interest expense       (1,308)                (785)                              (1,308)                (785)
    Less: Income tax expense     (22,538)               (19,785)               (849)                          (23,387)               (19,785)
    Net earnings from cont ops $                    45,882                 41,736                 6,952                          52,834                 41,736
                                       
Note:                Depreciation and amortization expense was $23.6 million and $18.6 million for the years ended September 30, 2016 and 2015, respectively.
                                       
(1)                  Adjustments consist of $6.9 million (or $0.26 per share) of restructuring charges at ETS & Doble during fiscal year 2016.

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
 
                September 30,                                                                                                                                                        September 30,
                                                                                            2016                                                                                                                                                                                    2015
                                                                                                                                                                   
Assets                                                                                                                                                                                                   
  Cash and cash equivalents                         $                    53,825                                                                                                                                                               39,411
  Accounts receivable, net                            121,486                                                                                                                                                              102,607
  Costs and estimated earnings on                                                                                                                                                                        
    long-term contracts            28,746                                                                                                                                                               28,387
  Inventories                                         105,542                                                                                                                                                              99,786
  Current portion of deferred tax assets                    -      15,558
  Other current assets                                13,884                                                                                                                                                               12,502
    Total current assets           323,483                                                                                                                                                              298,251
  Property, plant and equipment, net                  92,405                                                                                                                                                               77,358
  Intangible assets, net                              231,759                                                                                                                                                              190,748
  Goodwill                                            323,616                                                                                                                                                              291,157
  Other assets                                        7,108                                                                                                                                                                6,694
              $                    978,371                                                                                                                                                              864,208
                                                                                                                                                                   
Liabilities and Shareholders’ Equity                                                                                                                                                                                        
  Short-term borrowings and current                 $                    20,000                                                                                                                                                               20,000
    maturities of long-term debt                                                                                                                                                      
  Accounts payable                                    42,074                                                                                                                                                               37,863
  Current portion of deferred revenue                 27,212                                                                                                                                                               21,498
  Other current liabilities                           68,790                                                                                                                                                               63,850
    Total current liabilities      158,076                                                                                                                                                              143,211
  Deferred tax liabilities                            69,562                                                                                                                                                               74,469
  Other liabilities                                   45,624                                                                                                                                                               32,346
  Long-term debt                                      90,000                                                                                                                                                               30,000
  Shareholders’ equity                                615,109                                                                                                                                                              584,182
              $                    978,371                                                                                                                                                              864,208

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
 
                                                     Year Ended
                                                                                          September 30,
                                                                                          2016
Cash flows from operating activities:                                   
  Net earnings                                    $                    45,882
  Adjustments to reconcile net earnings              
  to net cash provided by operating activities:      
  Depreciation and amortization                     23,568
  Stock compensation expense                        4,704
  Changes in assets and liabilities                 1,746
  Effect of deferred taxes                          (2,993)
  Other                                             952
  Net cash provided by operating activities         73,859
                                                     
Cash flows from investing activities:                                   
  Acquisition of businesses, net of cash acquired   (82,062)
  Capital expenditures                              (13,843)
  Additions to capitalized software                 (8,665)
  Net cash used by investing activities             (104,570)
                                                     
Cash flows from financing activities:                                   
  Proceeds from long-term debt                      140,000
  Principal payments on long-term debt              (80,000)
  Dividends paid                                    (8,248)
  Purchases of common stock into treasury           (4,303)
  Debt issuance costs                               (1,097)
  Other                                             (128)
  Net cash provided by financing activities         46,224
                                                     
Effect of exchange rate changes on cash and cash equivalents           (1,099)
                                                     
Net increase in cash and cash equivalents                              14,414
Cash and cash equivalents, beginning of period                         39,411
Cash and cash equivalents, end of period                             $                    53,825

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data (Unaudited)
(Dollars in thousands)
 
Backlog And Entered Orders - Q4 FY 2016                          USG                    Test                   Filtration             Technical              Total
                                                                                                                                                                                                                  Packaging
  Beginning Backlog - 7/1/16                $                    30,589                 83,913                 177,016                21,712                 313,230
  Entered Orders                              37,383                 41,061                 80,779                 19,421                 178,644
  Sales                    (34,129)               (41,903)               (61,994)               (21,479)               (159,505)
  Ending Backlog - 9/30/16                  $                    33,843                 83,071                 195,801                19,654                 332,369
                         
                         
                         
Backlog And Entered Orders - FY 2016                             USG                    Test                   Filtration             Technical              Total
                                                                                                                                                                                                                  Packaging
  Beginning Backlog - 10/1/15               $                    36,272                 95,129                 178,844                17,264                 327,509
  Entered Orders                              125,356                149,454                224,709                76,800                 576,319
  Sales                    (127,785)              (161,512)              (207,752)              (74,410)               (571,459)
  Ending Backlog - 9/30/16                  $                    33,843                 83,071                 195,801                19,654                 332,369

ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands)
                                         
                                    As Adjusted             
                                FY 2016                FY 2016                FY 2015
                                         
  EBITDA                                           $93,296                $101,097               $80,890
  Less: Depreciation & Amortization expense        (23,568)               (23,568)               (18,584)
  Less: FY 16 Test & Doble restructuring charges       (7,801)                 
  Consolidated EBIT                                $69,728                $69,728                $62,306
  Less: Interest expense                           (1,308)                (1,308)                (785)
  Less: Income tax expense                         (22,538)               (22,538)               (19,785)
  Net earnings from cont ops                       $45,882                $45,882                $41,736
                                         

SOURCE ESCO Technologies Inc.

Kate Lowrey, Director of Investor Relations, (314) 213-7277

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: ESCO Technologies Inc via Globenewswire



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