Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Jun. 30, 2024 | Jul. 31, 2024 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2024 | |
Document Transition Report | false | |
Entity File Number | 1-10596 | |
Entity Registrant Name | ESCO TECHNOLOGIES INC. | |
Entity Incorporation, State or Country Code | MO | |
Entity Tax Identification Number | 43-1554045 | |
Entity Address, Address Line One | 9900A CLAYTON ROAD | |
Entity Address, City or Town | ST. LOUIS | |
Entity Address, State or Province | MO | |
Entity Address, Postal Zip Code | 63124-1186 | |
City Area Code | 314 | |
Local Phone Number | 213-7200 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | ESE | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,752,712 | |
Entity Central Index Key | 0000866706 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 260,783 | $ 248,749 | $ 728,226 | $ 683,386 |
Costs and expenses: | ||||
Cost of sales | 157,435 | 147,274 | 443,933 | 415,953 |
Selling, general and administrative expenses | 54,955 | 55,376 | 164,020 | 160,555 |
Amortization of intangible assets | 8,145 | 7,132 | 24,585 | 21,023 |
Interest expense, net | 3,335 | 2,495 | 9,228 | 6,422 |
Other expenses (income), net | (259) | 966 | 613 | 1,678 |
Total costs and expenses | 223,611 | 213,243 | 642,379 | 605,631 |
Earnings before income taxes | 37,172 | 35,506 | 85,847 | 77,755 |
Income tax expense | 7,942 | 7,563 | 18,229 | 17,207 |
Net earnings | $ 29,230 | $ 27,943 | $ 67,618 | $ 60,548 |
Earnings per share: | ||||
Basic - Net earnings | $ 1.14 | $ 1.08 | $ 2.62 | $ 2.35 |
Diluted - Net earnings | $ 1.13 | $ 1.08 | $ 2.62 | $ 2.34 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net earnings | $ 29,230 | $ 27,943 | $ 67,618 | $ 60,548 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (1,001) | (821) | 3,668 | 12,926 |
Total other comprehensive income (loss), net of tax | (1,001) | (821) | 3,668 | 12,926 |
Comprehensive income | $ 28,229 | $ 27,122 | $ 71,286 | $ 73,474 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 63,042 | $ 41,866 |
Accounts receivable, net of allowance for credit losses of $2,387 and $2,264, respectively | 213,592 | 198,557 |
Contract assets | 134,637 | 138,633 |
Inventories | 219,312 | 184,067 |
Other current assets | 22,312 | 17,972 |
Total current assets | 652,895 | 581,095 |
Property, plant and equipment, net of accumulated depreciation of $190,738 and $174,698, respectively | 164,749 | 155,484 |
Intangible assets, net of accumulated amortization of $229,467 and $204,881, respectively | 408,981 | 392,124 |
Goodwill | 535,372 | 503,177 |
Operating lease assets | 37,716 | 39,839 |
Other assets | 11,342 | 11,495 |
Total assets | 1,811,055 | 1,683,214 |
Current liabilities: | ||
Current maturities of long-term debt | 20,000 | 20,000 |
Accounts payable | 83,411 | 86,973 |
Contract liabilities | 113,653 | 112,277 |
Accrued salaries | 42,662 | 43,814 |
Accrued other expenses | 51,481 | 51,587 |
Total current liabilities | 311,207 | 314,651 |
Deferred tax liabilities | 77,570 | 75,531 |
Non-current operating lease liabilities | 35,148 | 36,554 |
Other liabilities | 40,444 | 43,336 |
Long-term debt | 153,000 | 82,000 |
Total liabilities | 617,369 | 552,072 |
Shareholders' equity: | ||
Preferred stock, par value $.01 per share, authorized 10,000,000 shares | ||
Common stock, par value $.01 per share, authorized 50,000,000 shares, issued 30,809,483 and 30,781,699 shares, respectively | 308 | 308 |
Additional paid-in capital | 309,982 | 304,850 |
Retained earnings | 1,050,748 | 989,315 |
Accumulated other comprehensive loss, net of tax | (20,301) | (23,969) |
Total stockholders' equity before treasury stock | 1,340,737 | 1,270,504 |
Less treasury stock, at cost: 5,056,771 and 4,995,414 common shares, respectively | (147,051) | (139,362) |
Total shareholders' equity | 1,193,686 | 1,131,142 |
Total liabilities and shareholders' equity | $ 1,811,055 | $ 1,683,214 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Net of allowance for credit losses | $ 2,387 | $ 2,264 |
Net of accumulated depreciation | 190,738 | 174,698 |
Net of accumulated amortization | $ 229,467 | $ 204,881 |
Preferred stock, par value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 30,809,483 | 30,781,699 |
Treasury stock, shares | 5,056,771 | 4,995,414 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash flows from operating activities: | ||
Net earnings | $ 67,618 | $ 60,548 |
Adjustments to reconcile net earnings to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 41,358 | 37,699 |
Stock compensation expense | 6,369 | 7,007 |
Changes in assets and liabilities | (53,839) | (72,346) |
Effect of deferred taxes | (6,052) | (3,706) |
Net cash provided by operating activities | 55,454 | 29,202 |
Cash flows from investing activities: | ||
Acquisition of business, net of cash acquired | (56,383) | (17,694) |
Additions to capitalized software and other | (8,556) | (9,263) |
Capital expenditures | (24,949) | (16,993) |
Net cash used by investing activities | (89,888) | (43,950) |
Cash flows from financing activities: | ||
Proceeds from long-term debt and short-term borrowings | 193,000 | 88,000 |
Principal payments on long-term debt and short-term borrowings | (122,000) | (93,000) |
Purchases of common stock into treasury | (7,998) | (12,401) |
Dividends paid | (6,185) | (6,189) |
Other | (1,516) | (2,557) |
Net cash provided (used) by financing activities | 55,301 | (26,147) |
Effect of exchange rate changes on cash and cash equivalents | 309 | (777) |
Net increase (decrease) in cash and cash equivalents | 21,176 | (41,672) |
Cash and cash equivalents, beginning of period | 41,866 | 97,724 |
Cash and cash equivalents, end of period | 63,042 | 56,052 |
Supplemental cash flow information: | ||
Interest paid | 8,430 | 5,564 |
Income taxes paid (including state and foreign) | $ 25,952 | $ 18,313 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Jun. 30, 2024 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements, in the opinion of management, include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results for the interim periods presented. The unaudited condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all the disclosures required for annual financial statements by accounting principles generally accepted in the United States of America (GAAP) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as filed with the SEC on November 29, 2023. The Company’s results for the three-month period ended June 30, 2024 are not necessarily indicative of the results for the entire 2024 fiscal year. References to the third quarters of 2024 and 2023 represent the fiscal quarters ended June 30, 2024 and 2023, respectively. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates. Certain prior period amounts have been reclassified to conform to the current period presentation. |
EARNINGS PER SHARE (EPS)
EARNINGS PER SHARE (EPS) | 9 Months Ended |
Jun. 30, 2024 | |
EARNINGS PER SHARE (EPS) | |
EARNINGS PER SHARE (EPS) | 2. EARNINGS PER SHARE (EPS) Basic EPS is calculated using the weighted average number of common shares outstanding during the period. Diluted EPS is calculated using the weighted average number of common shares outstanding during the period plus shares issuable upon the assumed exercise of dilutive common share options and vesting of restricted and performance shares by using the treasury stock method. The number of shares used in the calculation of earnings per share for each period presented is as follows (in thousands): Three Months Nine Months Ended June 30, Ended June 30, 2024 2023 2024 2023 Weighted Average Shares Outstanding — Basic 25,753 25,757 25,781 25,808 Dilutive Restricted and Performance Shares 87 70 63 82 Adjusted Shares — Diluted 25,840 25,827 25,844 25,890 |
ACQUISITION
ACQUISITION | 9 Months Ended |
Jun. 30, 2024 | |
ACQUISITION | |
ACQUISITION | 3. ACQUISITION On November 9, 2023, the Company acquired MPE Limited (MPE), based in the United Kingdom, for a purchase price of approximately $56.2 million, net of cash acquired. MPE is a leading global manufacturer of high-performance EMC/EMP filters and capacitor products for military, utility, telecommunication, and other critical infrastructure applications. Since the date of acquisition, the operating results for the MPE business have been included as part of ETS-Lindgren in the Test segment. The acquisition date fair value of the assets acquired and liabilities assumed primarily were as follows: approximately $0.4 million of accounts receivable, $1.1 million of inventory, $1.7 million of property, plant and equipment, $0.7 million of accounts payable and accrued expenses, $7.8 million of deferred tax liabilities, and $31.1 million of identifiable intangible assets, mainly consisting of customer relationships totaling $29.1 million. The acquired goodwill of $30.3 million related to excess value associated with opportunities to expand the services and products that the Company can offer to its customers. The Company does not anticipate that the goodwill will be deductible for tax purposes. The Company paid a $0.2 million working capital settlement in the third quarter of fiscal 2024. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Jun. 30, 2024 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 4. SHARE-BASED COMPENSATION The Company provides compensation benefits to certain key employees under several share-based plans providing for performance-accelerated and/or time-vested restricted stock unit awards, and to non-employee directors under a separate compensation plan. Performance-Accelerated Restricted Stock Unit (PARS) Awards and Time-Vested Restricted Stock Unit (RSU) Awards, and Performance Share Unit (PSU) Awards Compensation expense related to these awards was $2.0 million and $5.5 million for the three and nine-month periods ended June 30, 2024, respectively, and $1.4 million and $6.0 million for the corresponding periods in 2023. As of June 30, 2024, there were 221,595 unvested stock units outstanding. Non-Employee Directors Plan Compensation expense related to the non-employee director grants was $0.3 million and $0.9 million for the three and nine-month periods ended June 30, 2024, respectively, and $0.3 million and $1.0 million for the corresponding periods in 2023. The total share-based compensation cost that has been recognized in the results of operations and included within selling, general and administrative expenses (SG&A) was $2.2 million and $6.4 million for the three and nine-month periods ended June 30, 2024, respectively, and $1.7 million and $7.0 million for the corresponding periods in 2023. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $0.5 million and $1.4 million for the three and nine-month periods ended June 30, 2024, respectively, and $0.2 million and $0.9 million for the corresponding periods in 2023. As of June 30, 2024, there was $11.0 million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is expected to be recognized over a remaining weighted-average period of 1.5 years. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Jun. 30, 2024 | |
INVENTORIES | |
INVENTORIES | 5. INVENTORIES Inventories consist of the following: June 30, September 30, (In thousands) 2024 2023 Finished goods $ 41,955 34,577 Work in process 59,837 42,178 Raw materials 117,520 107,312 Total inventories $ 219,312 184,067 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Jun. 30, 2024 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 6. GOODWILL AND OTHER INTANGIBLE ASSETS Included on the Company’s Consolidated Balance Sheets at June 30, 2024 and September 30, 2023 are the following intangible assets gross carrying amounts and accumulated amortization: June 30, September 30, (Dollars in thousands) 2024 2023 Goodwill $ 535,372 503,177 Intangible assets with determinable lives: Patents Gross carrying amount $ 2,551 2,516 Less: accumulated amortization 1,322 1,218 Net $ 1,229 1,298 Capitalized software Gross carrying amount $ 130,648 121,883 Less: accumulated amortization 89,737 80,774 Net $ 40,911 41,109 Customer relationships Gross carrying amount $ 327,537 296,927 Less: accumulated amortization 127,322 113,311 Net $ 200,215 183,616 Other Gross carrying amount $ 15,122 14,232 Less: accumulated amortization 11,085 9,578 Net $ 4,037 4,654 Intangible assets with indefinite lives: Trade names $ 162,589 161,447 The changes in the carrying amount of goodwill attributable to each business segment for the nine months ended June 30, 2024 is as follows: Aerospace (Dollars in millions) USG Test & Defense Total Balance as of September 30, 2023 $ 353.6 34.0 115.6 503.2 Acquisition activity — 30.5 — 30.5 Foreign currency translation 0.9 0.8 — 1.7 Balance as of June 30, 2024 $ 354.5 65.3 115.6 535.4 |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 9 Months Ended |
Jun. 30, 2024 | |
BUSINESS SEGMENT INFORMATION | |
BUSINESS SEGMENT INFORMATION | 7. BUSINESS SEGMENT INFORMATION The Company is organized based on the products and services that it offers and classifies its continuing business operations in three reportable segments for financial reporting purposes: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test). The Aerospace & Defense segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Globe Composite Solutions, LLC (Globe) and Mayday Manufacturing Co. (Mayday). The companies within this segment primarily design and manufacture specialty filtration, fluid control and naval products, including hydraulic filter elements and fluid control devices used in aerospace and defense applications; unique filter mechanisms used in micro-propulsion devices for satellites, custom designed filters for manned aircraft and submarines; products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, and other communications, sealing, surface control and hydrodynamic related applications to enhance U.S. Navy maritime survivability; precision-tolerance machined components for the aerospace and defense industry; metal processing services; and miniature electro-explosive devices utilized in mission-critical defense and aerospace applications. The USG segment’s operations consist primarily of Doble Engineering Company and related subsidiaries including Morgan Schaffer and Altanova (collectively, Doble), and NRG Systems, Inc. (NRG). Doble is an industry leader in the development, manufacture and delivery of diagnostic testing solutions that enable electric power grid operators to assess the integrity of high voltage power delivery equipment. It combines three core elements for customers – diagnostic test and condition monitoring instruments, expert consulting, and testing services – and provides access to its large reserve of related empirical knowledge. NRG is a global market leader in the design and manufacture of decision support tools for the renewable energy industry, primarily wind and solar. The Test segment’s operations consist primarily of ETS-Lindgren Inc. and related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in designing and manufacturing products and systems to measure and control RF and acoustic energy. It serves the acoustics, medical, health and safety, electronics, wireless communications, automotive and defense markets, supplying a broad range of turnkey systems, including RF test facilities and measurement systems, acoustic test enclosures, RF and magnetically shielded rooms and secure communication facilities, and providing the design, program management, installation and integration services required to successfully complete these types of facilities. It also provides a broad range of components including RF absorptive materials, filters, antennas, field probes, test cells, proprietary measurement software and other test accessories required to perform a variety of tests and measurements, and offers a variety of services including calibration and product tests. Management evaluates and measures the performance of its reportable segments based on “Net Sales” and “EBIT”, which are detailed in the table below. EBIT is defined as earnings before interest and taxes. Three Months Nine Months Ended June 30, Ended June 30, (In thousands) 2024 2023 2024 2023 NET SALES Aerospace & Defense $ 114,450 103,469 323,884 285,434 USG 90,277 89,966 260,570 240,172 Test 56,056 55,314 143,772 157,780 Consolidated totals $ 260,783 248,749 728,226 683,386 EBIT Aerospace & Defense $ 21,356 21,665 61,396 52,996 USG 22,155 20,351 57,355 50,543 Test 9,292 8,643 16,614 21,280 Corporate (loss) (12,296) (12,658) (40,290) (40,642) Consolidated EBIT 40,507 38,001 95,075 84,177 Less: Interest expense (3,335) (2,495) (9,228) (6,422) Earnings before income taxes $ 37,172 35,506 85,847 77,755 Non-GAAP Financial Measures The financial measure “EBIT” is presented in the above table and elsewhere in this Report. EBIT on a consolidated basis is a non-GAAP financial measure. Management believes that EBIT is useful in assessing the operational profitability of the Company’s business segments because it excludes interest and taxes, 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. A reconciliation of EBIT to net earnings is set forth in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – EBIT. The Company believes that the presentation of EBIT provides important supplemental information to investors to facilitate comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. However, the Company’s non-GAAP financial measures may not be comparable to other companies’ non-GAAP financial performance measures. Furthermore, the use of non-GAAP financial measures is not intended to replace any measures of performance determined in accordance with GAAP. |
DEBT
DEBT | 9 Months Ended |
Jun. 30, 2024 | |
DEBT | |
DEBT | 8. DEBT The Company’s debt is summarized as follows: June 30, September 30, (In thousands) 2024 2023 Total borrowings $ 173,000 102,000 Current portion of long-term debt (20,000) (20,000) Total long-term debt, less current portion $ 153,000 82,000 The Credit Facility includes a $500 million revolving line of credit as well as provisions allowing for the increase of the credit facility commitment amount by an additional $250 million, if necessary, with the consent of the lenders. The bank syndication supporting the facility is comprised of a diverse group of seven banks led by JP Morgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and Commerce Bank and TD Bank, N.A. as co-documentation agents. The Credit Facility matures August 30, 2028, with balance due by this date. At June 30, 2024, the Company had approximately $321 million available to borrow under the Credit Facility, plus the $250 million increase option subject to the lenders’ consent, in addition to $63.0 million cash on hand. The Company classified $20 million as the current portion of long-term debt as of June 30, 2024, 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. The letters of credit issued and outstanding under the Credit Facility totaled $5.5 million at June 30, 2024. Interest on borrowings under the Credit Facility is calculated at a spread over either an Adjusted Term SOFR Rate, Adjusted EURIBOR Rate, Adjusted CDOR Rate, Alternate Base Rate or Daily Simple RFR, at the Company’s election. The Credit Facility also requires a facility fee ranging from 12.5 to 25 basis points per annum on the unused portion. The interest rate spreads and the facility fee are subject to increase or decrease depending on the Company’s leverage ratio. The weighted average interest rates were 6.7% and 6.8% for the three and nine-month periods ending June 30, 2024, respectively, and 6.05% and 5.57% for the three and nine-month periods ending June 30, 2023. As of June 30, 2024, the Company was in compliance with all covenants. |
INCOME TAX EXPENSE
INCOME TAX EXPENSE | 9 Months Ended |
Jun. 30, 2024 | |
INCOME TAX EXPENSE | |
INCOME TAX EXPENSE | 9. INCOME TAX EXPENSE The third quarter 2024 effective income tax rate was 21.4% compared to 21.3% in the third quarter of 2023. The effective income tax rate in the first nine months of 2024 was 21.2% compared to 22.1% for the first nine months of 2023. Income tax expense in the first nine months of 2024 was favorably impacted by discrete events that occurred during the second quarter of 2024 including the release of a foreign valuation allowance and excess tax benefit related to the vesting of share-based director compensation. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Jun. 30, 2024 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY The change in shareholders’ equity for the first three and nine months of 2024 and 2023 is shown below (in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Common stock Beginning balance 308 308 308 307 Stock plans — — — 1 Ending balance 308 308 308 308 Additional paid-in-capital Beginning balance 308,065 304,184 304,850 301,553 Stock plans 1,917 1,371 5,132 4,002 Ending balance 309,982 305,555 309,982 305,555 Retained earnings Beginning balance 1,023,578 933,499 989,315 905,022 Net earnings common stockholders 29,230 27,943 67,618 60,548 Dividends paid (2,060) (2,061) (6,185) (6,189) Ending balance 1,050,748 959,381 1,050,748 959,381 Accumulated other comprehensive income (loss) Beginning balance (19,300) (18,018) (23,969) (31,764) Foreign currency translation (1,001) (821) 3,668 12,925 Ending balance (20,301) (18,839) (20,301) (18,839) Treasury stock Beginning balance (146,241) (139,178) (139,362) (126,961) Share repurchases, net (810) (184) (7,689) (12,401) Ending balance (147,051) (139,362) (147,051) (139,362) Total equity 1,193,686 1,107,043 1,193,686 1,107,043 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Jun. 30, 2024 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS The accounting guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows: ● Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Financial Assets and Liabilities The Company has estimated the fair value of its financial instruments as of June 30, 2024 and September 30, 2023 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables, and other current assets and liabilities approximate fair value because of the short maturity of those instruments. Fair Value of Financial Instruments The Company’s forward contracts and interest rate swaps are classified within Level 2 of the valuation hierarchy in accordance with FASB Accounting Standards Codification (ASC) 825, and are immaterial. Nonfinancial Assets and Liabilities The Company’s nonfinancial assets such as property, plant and equipment, and other intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. No impairments were recorded during the three and nine-month periods ended June 30, 2024. |
REVENUES
REVENUES | 9 Months Ended |
Jun. 30, 2024 | |
REVENUES | |
REVENUES | 12. REVENUES Disaggregation of Revenues Revenues by customer type, geographic location, and revenue recognition method for the three and nine-month periods ended June 30, 2024 are presented in the tables below as the Company deems it best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The tables below also include a reconciliation of the disaggregated revenue within each reportable segment. Three months ended June 30, 2024 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 45,404 $ 88,076 $ 42,327 $ 175,807 Government 69,046 2,201 13,729 84,976 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Geographic location: United States $ 95,265 $ 54,063 $ 32,575 $ 181,903 International 19,185 36,214 23,481 78,880 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Revenue recognition method: Point in time $ 53,148 $ 72,985 $ 11,426 $ 137,559 Over time 61,302 17,292 44,630 123,224 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Nine months ended June 30, 2024 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 131,993 $ 254,765 $ 111,951 $ 498,709 Government 191,891 5,805 31,821 229,517 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Geographic location: United States $ 267,325 $ 165,789 $ 82,370 $ 515,484 International 56,559 94,781 61,402 212,742 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Revenue recognition method: Point in time $ 146,076 $ 209,973 $ 29,706 $ 385,755 Over time 177,808 50,597 114,066 342,471 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Revenues by customer type, geographic location, and revenue recognition method for the three and nine-month periods ended June 30, 2023 are presented in the tables below. Three months ended June 30, 2023 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 45,574 $ 88,442 $ 48,407 $ 182,423 Government 57,895 1,524 6,907 66,326 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Geographic location: United States $ 86,031 $ 55,011 $ 32,246 $ 173,288 International 17,438 34,955 23,068 75,461 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Revenue recognition method: Point in time $ 48,496 $ 74,128 $ 11,496 $ 134,120 Over time 54,973 15,838 43,818 114,629 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Nine months ended June 30, 2023 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 128,016 $ 236,715 $ 137,587 $ 502,318 Government 157,418 3,457 20,193 181,068 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 Geographic location: United States $ 237,481 $ 154,410 $ 87,253 $ 479,144 International 47,953 85,762 70,527 204,242 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 Revenue recognition method: Point in time $ 129,355 $ 194,240 $ 32,565 $ 356,160 Over time 156,079 45,932 125,215 327,226 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 Revenue Recognition Payment terms with our customers vary by the type and location of the customer and the products or services offered. Arrangements with customers that include payment terms extending beyond one year are not significant. The transaction price for these contracts reflects our estimate of returns and discounts, which are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Under the typical payment terms of our long term fixed price contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of costs incurred as the work progresses. For our overtime revenue recognized using the output method of costs incurred, contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to one or more years, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change. In addition, in the USG segment, we recognize revenue as a series of distinct services based on each day of providing services (straight-line over the contract term) for certain of our USG segment contracts. Under the typical payment terms of our service contracts, the customer pays us in advance of when services are performed. In addition, in the Test segment, we use milestones to measure progress for our Test segment contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Remaining Performance Obligations Remaining performance obligations, which is the equivalent of backlog, represent the expected transaction price allocated to contracts that the Company expects to recognize as revenue in future periods when the Company performs under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At June 30, 2024, the Company had $888.7 million in remaining performance obligations of which the Company expects to recognize revenues of approximately 68% in the next twelve months. Contract assets, contract liabilities and accounts receivable Assets and liabilities related to contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At June 30, 2024, contract assets, contract liabilities and accounts receivable totaled $134.6 million, $123.5 million and $213.6 million, respectively. During the first nine months of 2024, the Company recognized approximately $54 million in revenues that were included in the contract liabilities balance at September 30, 2023. At September 30, 2023, contract assets, contract liabilities and accounts receivable totaled $138.6 million, $123.1 million and $198.6 million, respectively. |
LEASES
LEASES | 9 Months Ended |
Jun. 30, 2024 | |
LEASES | |
LEASES | 13. LEASES The Company determines at lease inception whether an arrangement that provides control over the use of an asset is a lease. The Company recognizes at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Certain of the Company’s leases include options to extend the term of the lease for up to 20 years. When it is reasonably certain that the Company will exercise the option, Management includes the impact of the option in the lease term for purposes of determining total future lease payments. As most of the Company’s lease agreements do not explicitly state the discount rate implicit in the lease, Management uses the Company’s incremental borrowing rate on the commencement date to calculate the present value of future payments based on the tenor of each arrangement. The Company’s leases for real estate commonly include escalating payments. These variable lease payments are included in the calculation of the ROU asset and lease liability. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any deferred rent, lease pre-payments and initial direct costs of obtaining the lease. In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. Non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred. The Company’s leases are for office space, manufacturing facilities, and machinery and equipment. The components of lease costs are shown below: Three Months Ended Three Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Finance lease cost Amortization of right-of-use assets $ 372 $ 393 Interest on lease liabilities 213 230 Operating lease cost 1,937 1,858 Total lease costs $ 2,522 $ 2,481 Nine Months Ended Nine Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Finance lease cost Amortization of right-of-use assets $ 1,137 $ 1,179 Interest on lease liabilities 652 698 Operating lease cost 5,675 5,356 Total lease costs $ 7,464 $ 7,233 Additional information related to leases are shown below: Three Months Ended Three Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,867 $ 1,792 Operating cash flows from finance leases 213 230 Financing cash flows from finance leases 331 334 Right-of-use assets obtained in exchange for operating lease liabilities 515 402 Nine Months Ended Nine Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 5,510 $ 5,172 Operating cash flows from finance leases 652 698 Financing cash flows from finance leases 1,013 991 Right-of-use assets obtained in exchange for operating lease liabilities 2,194 14,984 June 30, 2024 June 30, 2023 Weighted-average remaining lease term Operating leases 10.8 years 11.4 years Finance leases 11.1 years 11.3 years Weighted-average discount rate Operating leases 4.56 % 4.42 % Finance leases 4.69 % 4.62 % The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on our condensed Consolidated Balance Sheet on June 30, 2024: (Dollars in thousands) Operating Finance Years Ending September 30: Leases Leases 2024 (excluding the nine months ended June 30, 2024) $ 1,569 547 2025 6,108 2,233 2026 4,865 2,297 2027 4,620 2,357 2028 and thereafter 33,915 16,470 Total minimum lease payments 51,077 23,904 Less: amounts representing interest 11,334 5,582 Present value of net minimum lease payments $ 39,743 18,322 Less: current portion of lease obligations 4,595 1,403 Non-current portion of lease obligations 35,148 16,919 ROU assets $ 37,716 14,055 Operating lease liabilities are included in the condensed Consolidated Balance Sheet in accrued other expenses (current portion) and as a caption on the condensed Consolidated Balance Sheet Balance Sheet ROU ROU |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Jun. 30, 2024 | |
NEW ACCOUNTING PRONOUNCEMENTS | |
NEW ACCOUNTING PRONOUNCEMENTS | 14. NEW ACCOUNTING PRONOUNCEMENTS In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Jun. 30, 2024 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 15. SUBSEQUENT EVENT On July 8, 2024, the Company announced that it has agreed to acquire the Signature Management & Power (or the “Business”) business of Ultra Maritime for a purchase price of approximately $550 million. The transaction will be funded through cash on hand and incremental debt, with committed financing in place. Signature Management & Power is a provider of mission-critical signature and power management solutions for submarines and surface ships for the U.S. and UK naval defense markets. The Business is headquartered in Long Island, New York, operates out of employees. Signature Management & Power will become part of ESCO’s Aerospace & Defense segment and is expected to have approximately million of revenue in calendar year 2024. The closing of the transaction is subject to certain conditions, including the (i) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S. and (ii) receipt of clearance under the UK National Security and Investment Act of 2021. Pursuant to a Commitment Letter entered into on July 8, 2024 between the Company and JPMorgan Chase Bank, N.A., on August 5, 2024 the Registrant and certain of its subsidiaries entered into Amendment No. 1 (the “Amendment”) to its Amended and Restated Credit Agreement dated August 30, 2023 (the “2023 Credit Agreement”) among the Company and certain of its subsidiaries, JPMorgan Chase Bank, N.A., as administrative agent thereunder, the initial lenders party thereto and Citibank, N.A. The Amendment, among other things, (i) implements a senior incremental delayed draw term loan credit facility in an aggregate principal amount of up to $375 million (the “Incremental Facility”), and (ii) permits the direct or indirect acquisition by the Registrant or certain of its subsidiaries of all of the issued and outstanding shares of Ultra PMES Limited, Measurement Systems, Inc., EMS Development Corporation, and DNE Technologies, Inc. (the “Transaction”), pursuant to and in accordance with the terms and conditions of that certain Sale and Purchase Agreement, dated July 8, 2024, among Ultra Electronics Holdings Limited, as parent seller, the Registrant, as guarantor, and certain of the Registrant’s subsidiaries as buyers. The proceeds of the loans drawn under the Incremental Facility will be applied to pay a portion of the cash consideration for the Transaction and other customary fees, premiums, expenses and costs incurred in connection with the Transaction. See further discussion of the transaction and financing arrangements in the Company’s Form 8-K’s filed on July 8, 2024 and August 7, 2024. |
EARNINGS PER SHARE (EPS) (Table
EARNINGS PER SHARE (EPS) (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
EARNINGS PER SHARE (EPS) | |
Schedule of number of shares used in the calculation of earnings per share | Three Months Nine Months Ended June 30, Ended June 30, 2024 2023 2024 2023 Weighted Average Shares Outstanding — Basic 25,753 25,757 25,781 25,808 Dilutive Restricted and Performance Shares 87 70 63 82 Adjusted Shares — Diluted 25,840 25,827 25,844 25,890 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
INVENTORIES | |
Schedule of inventories | June 30, September 30, (In thousands) 2024 2023 Finished goods $ 41,955 34,577 Work in process 59,837 42,178 Raw materials 117,520 107,312 Total inventories $ 219,312 184,067 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of intangible assets gross carrying amounts and accumulated amortization | June 30, September 30, (Dollars in thousands) 2024 2023 Goodwill $ 535,372 503,177 Intangible assets with determinable lives: Patents Gross carrying amount $ 2,551 2,516 Less: accumulated amortization 1,322 1,218 Net $ 1,229 1,298 Capitalized software Gross carrying amount $ 130,648 121,883 Less: accumulated amortization 89,737 80,774 Net $ 40,911 41,109 Customer relationships Gross carrying amount $ 327,537 296,927 Less: accumulated amortization 127,322 113,311 Net $ 200,215 183,616 Other Gross carrying amount $ 15,122 14,232 Less: accumulated amortization 11,085 9,578 Net $ 4,037 4,654 Intangible assets with indefinite lives: Trade names $ 162,589 161,447 |
Schedule of carrying amount of goodwill attributable to each business segment | Aerospace (Dollars in millions) USG Test & Defense Total Balance as of September 30, 2023 $ 353.6 34.0 115.6 503.2 Acquisition activity — 30.5 — 30.5 Foreign currency translation 0.9 0.8 — 1.7 Balance as of June 30, 2024 $ 354.5 65.3 115.6 535.4 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
BUSINESS SEGMENT INFORMATION | |
Schedule of net sales and earnings before income tax | Three Months Nine Months Ended June 30, Ended June 30, (In thousands) 2024 2023 2024 2023 NET SALES Aerospace & Defense $ 114,450 103,469 323,884 285,434 USG 90,277 89,966 260,570 240,172 Test 56,056 55,314 143,772 157,780 Consolidated totals $ 260,783 248,749 728,226 683,386 EBIT Aerospace & Defense $ 21,356 21,665 61,396 52,996 USG 22,155 20,351 57,355 50,543 Test 9,292 8,643 16,614 21,280 Corporate (loss) (12,296) (12,658) (40,290) (40,642) Consolidated EBIT 40,507 38,001 95,075 84,177 Less: Interest expense (3,335) (2,495) (9,228) (6,422) Earnings before income taxes $ 37,172 35,506 85,847 77,755 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
DEBT | |
Schedule of debt | June 30, September 30, (In thousands) 2024 2023 Total borrowings $ 173,000 102,000 Current portion of long-term debt (20,000) (20,000) Total long-term debt, less current portion $ 153,000 82,000 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
SHAREHOLDERS' EQUITY | |
Schedule of change in shareholders' equity | The change in shareholders’ equity for the first three and nine months of 2024 and 2023 is shown below (in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Common stock Beginning balance 308 308 308 307 Stock plans — — — 1 Ending balance 308 308 308 308 Additional paid-in-capital Beginning balance 308,065 304,184 304,850 301,553 Stock plans 1,917 1,371 5,132 4,002 Ending balance 309,982 305,555 309,982 305,555 Retained earnings Beginning balance 1,023,578 933,499 989,315 905,022 Net earnings common stockholders 29,230 27,943 67,618 60,548 Dividends paid (2,060) (2,061) (6,185) (6,189) Ending balance 1,050,748 959,381 1,050,748 959,381 Accumulated other comprehensive income (loss) Beginning balance (19,300) (18,018) (23,969) (31,764) Foreign currency translation (1,001) (821) 3,668 12,925 Ending balance (20,301) (18,839) (20,301) (18,839) Treasury stock Beginning balance (146,241) (139,178) (139,362) (126,961) Share repurchases, net (810) (184) (7,689) (12,401) Ending balance (147,051) (139,362) (147,051) (139,362) Total equity 1,193,686 1,107,043 1,193,686 1,107,043 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
REVENUES | |
Schedule of disaggregation of revenue by reportable segment | Three months ended June 30, 2024 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 45,404 $ 88,076 $ 42,327 $ 175,807 Government 69,046 2,201 13,729 84,976 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Geographic location: United States $ 95,265 $ 54,063 $ 32,575 $ 181,903 International 19,185 36,214 23,481 78,880 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Revenue recognition method: Point in time $ 53,148 $ 72,985 $ 11,426 $ 137,559 Over time 61,302 17,292 44,630 123,224 Total revenues $ 114,450 $ 90,277 $ 56,056 $ 260,783 Nine months ended June 30, 2024 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 131,993 $ 254,765 $ 111,951 $ 498,709 Government 191,891 5,805 31,821 229,517 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Geographic location: United States $ 267,325 $ 165,789 $ 82,370 $ 515,484 International 56,559 94,781 61,402 212,742 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Revenue recognition method: Point in time $ 146,076 $ 209,973 $ 29,706 $ 385,755 Over time 177,808 50,597 114,066 342,471 Total revenues $ 323,884 $ 260,570 $ 143,772 $ 728,226 Three months ended June 30, 2023 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 45,574 $ 88,442 $ 48,407 $ 182,423 Government 57,895 1,524 6,907 66,326 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Geographic location: United States $ 86,031 $ 55,011 $ 32,246 $ 173,288 International 17,438 34,955 23,068 75,461 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Revenue recognition method: Point in time $ 48,496 $ 74,128 $ 11,496 $ 134,120 Over time 54,973 15,838 43,818 114,629 Total revenues $ 103,469 $ 89,966 $ 55,314 $ 248,749 Nine months ended June 30, 2023 Aerospace (In thousands) & Defense USG Test Total Customer type: Commercial $ 128,016 $ 236,715 $ 137,587 $ 502,318 Government 157,418 3,457 20,193 181,068 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 Geographic location: United States $ 237,481 $ 154,410 $ 87,253 $ 479,144 International 47,953 85,762 70,527 204,242 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 Revenue recognition method: Point in time $ 129,355 $ 194,240 $ 32,565 $ 356,160 Over time 156,079 45,932 125,215 327,226 Total revenues $ 285,434 $ 240,172 $ 157,780 $ 683,386 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Jun. 30, 2024 | |
LEASES | |
Schedule of components of lease costs | Three Months Ended Three Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Finance lease cost Amortization of right-of-use assets $ 372 $ 393 Interest on lease liabilities 213 230 Operating lease cost 1,937 1,858 Total lease costs $ 2,522 $ 2,481 Nine Months Ended Nine Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Finance lease cost Amortization of right-of-use assets $ 1,137 $ 1,179 Interest on lease liabilities 652 698 Operating lease cost 5,675 5,356 Total lease costs $ 7,464 $ 7,233 |
Schedule of additional information related to leases | Three Months Ended Three Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,867 $ 1,792 Operating cash flows from finance leases 213 230 Financing cash flows from finance leases 331 334 Right-of-use assets obtained in exchange for operating lease liabilities 515 402 Nine Months Ended Nine Months Ended June 30, June 30, (Dollars in thousands) 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 5,510 $ 5,172 Operating cash flows from finance leases 652 698 Financing cash flows from finance leases 1,013 991 Right-of-use assets obtained in exchange for operating lease liabilities 2,194 14,984 June 30, 2024 June 30, 2023 Weighted-average remaining lease term Operating leases 10.8 years 11.4 years Finance leases 11.1 years 11.3 years Weighted-average discount rate Operating leases 4.56 % 4.42 % Finance leases 4.69 % 4.62 % |
Schedule of reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets | (Dollars in thousands) Operating Finance Years Ending September 30: Leases Leases 2024 (excluding the nine months ended June 30, 2024) $ 1,569 547 2025 6,108 2,233 2026 4,865 2,297 2027 4,620 2,357 2028 and thereafter 33,915 16,470 Total minimum lease payments 51,077 23,904 Less: amounts representing interest 11,334 5,582 Present value of net minimum lease payments $ 39,743 18,322 Less: current portion of lease obligations 4,595 1,403 Non-current portion of lease obligations 35,148 16,919 ROU assets $ 37,716 14,055 |
EARNINGS PER SHARE (EPS) (Detai
EARNINGS PER SHARE (EPS) (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
EARNINGS PER SHARE (EPS) | ||||
Weighted Average Shares Outstanding - Basic | 25,753 | 25,757 | 25,781 | 25,808 |
Dilutive Restricted and Performance Shares | 87 | 70 | 63 | 82 |
Adjusted Shares - Diluted | 25,840 | 25,827 | 25,844 | 25,890 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2023 | Jun. 30, 2024 | Jun. 30, 2024 | Jun. 30, 2023 | |
ACQUISITION | ||||
Payments to acquire businesses net of cash acquired | $ 56,383 | $ 17,694 | ||
Goodwill | $ 30,300 | $ 30,300 | ||
MPE Limited (MPE) | ||||
ACQUISITION | ||||
Payments to acquire businesses net of cash acquired | $ 56,200 | |||
Fair value of accounts receivable acquired | 400 | |||
Fair value of inventory acquired | 1,100 | |||
Fair value of property, plant and equipment acquired | 1,700 | |||
Fair value of accounts payable and accrued expenses acquired | 700 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities | 7,800 | |||
Business combination recognized identifiable assets acquired and liabilities assumed finite-lived intangibles | 29,100 | |||
Working capital settlement paid | $ 200 | |||
Customer Relationships | MPE Limited (MPE) | ||||
ACQUISITION | ||||
Fair value of identifiable intangible assets acquired | $ 31,100 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
SHARE-BASED COMPENSATION | ||||
Non-vested shares | 221,595 | 221,595 | ||
Selling, general and administrative expenses | ||||
SHARE-BASED COMPENSATION | ||||
Total share-based compensation cost | $ 2.2 | $ 1.7 | $ 6.4 | $ 7 |
Total income tax benefit recognized | 0.5 | 0.2 | 1.4 | 0.9 |
Performance-Accelerated Restricted Share (PARS) Awards | ||||
SHARE-BASED COMPENSATION | ||||
Pretax compensation expense | 2 | 1.4 | 5.5 | 6 |
Compensation Plan for Non-Employee Directors | ||||
SHARE-BASED COMPENSATION | ||||
Pretax compensation expense | 0.3 | $ 0.3 | 0.9 | $ 1 |
Total unrecognized compensation cost related to share-based compensation arrangements | $ 11 | $ 11 | ||
Weighted average period | 1 year 6 months |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
INVENTORIES | ||
Finished goods | $ 41,955 | $ 34,577 |
Work in process | 59,837 | 42,178 |
Raw materials | 117,520 | 107,312 |
Total inventories | $ 219,312 | $ 184,067 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible assets gross carrying amounts and accumulated amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Goodwill | $ 535,372 | $ 503,177 |
Less: accumulated amortization | 229,467 | 204,881 |
Patents | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Gross carrying amount | 2,551 | 2,516 |
Less: accumulated amortization | 1,322 | 1,218 |
Net | 1,229 | 1,298 |
Capitalized software | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Gross carrying amount | 130,648 | 121,883 |
Less: accumulated amortization | 89,737 | 80,774 |
Net | 40,911 | 41,109 |
Customer relationships | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Gross carrying amount | 327,537 | 296,927 |
Less: accumulated amortization | 127,322 | 113,311 |
Net | 200,215 | 183,616 |
Other | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Gross carrying amount | 15,122 | 14,232 |
Less: accumulated amortization | 11,085 | 9,578 |
Net | 4,037 | 4,654 |
Trade names | ||
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Trade names | $ 162,589 | $ 161,447 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in carrying amount of goodwill (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2024 USD ($) | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Beginning Balance | $ 503,177 |
Acquisition activity | 30,500 |
Foreign currency translation | 1,700 |
Ending Balance | 535,372 |
USG | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Beginning Balance | 353,600 |
Foreign currency translation | 900 |
Ending Balance | 354,500 |
Test | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Beginning Balance | 34,000 |
Acquisition activity | 30,500 |
Foreign currency translation | 800 |
Ending Balance | 65,300 |
Aerospace & Defense | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Beginning Balance | 115,600 |
Ending Balance | $ 115,600 |
BUSINESS SEGMENT INFORMATION (D
BUSINESS SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
BUSINESS SEGMENT INFORMATION | ||||
Net sales | $ 260,783 | $ 248,749 | $ 728,226 | $ 683,386 |
Consolidated EBIT | 40,507 | 38,001 | 95,075 | 84,177 |
Less: Interest expense | (3,335) | (2,495) | (9,228) | (6,422) |
Earnings before income taxes | 37,172 | 35,506 | 85,847 | 77,755 |
Aerospace & Defense | ||||
BUSINESS SEGMENT INFORMATION | ||||
Net sales | 114,450 | 103,469 | 323,884 | 285,434 |
Consolidated EBIT | 21,356 | 21,665 | 61,396 | 52,996 |
USG | ||||
BUSINESS SEGMENT INFORMATION | ||||
Net sales | 90,277 | 89,966 | 260,570 | 240,172 |
Consolidated EBIT | 22,155 | 20,351 | 57,355 | 50,543 |
Test | ||||
BUSINESS SEGMENT INFORMATION | ||||
Net sales | 56,056 | 55,314 | 143,772 | 157,780 |
Consolidated EBIT | 9,292 | 8,643 | 16,614 | 21,280 |
Corporate (loss) | ||||
BUSINESS SEGMENT INFORMATION | ||||
Consolidated EBIT | $ (12,296) | $ (12,658) | $ (40,290) | $ (40,642) |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
DEBT | ||
Total borrowings | $ 173,000 | $ 102,000 |
Current portion of long-term debt | (20,000) | (20,000) |
Total long-term debt, less current portion | $ 153,000 | $ 82,000 |
DEBT - Additional information (
DEBT - Additional information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Sep. 30, 2023 | |
DEBT | |||||
Cash on hand | $ 63,042 | $ 63,042 | $ 41,866 | ||
Revolving Credit Facility | |||||
DEBT | |||||
Line of credit facility, amount outstanding | 500,000 | 500,000 | |||
Line of credit facility, commitment fee amount | 250,000 | ||||
Line of credit facility, remaining borrowing capacity | 321,000 | 321,000 | |||
Cash on hand | 63,000 | 63,000 | |||
Current maturities of long-term debt | 20,000 | 20,000 | |||
Letters of credit outstanding, amount | $ 5,500 | $ 5,500 | |||
Debt weighted average interest rate | 6.70% | 6.05% | 6.80% | 5.57% | |
Minimum | Revolving Credit Facility | |||||
DEBT | |||||
Facility fee | 0.125% | ||||
Maximum | Revolving Credit Facility | |||||
DEBT | |||||
Line of credit facility, remaining borrowing capacity | $ 250,000 | $ 250,000 | |||
Facility fee | 0.25% |
INCOME TAX EXPENSE (Details)
INCOME TAX EXPENSE (Details) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
INCOME TAX EXPENSE | ||||
Effective income tax rate | 21.40% | 21.30% | 21.20% | 22.10% |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Changes in shareholder's equity | ||||
Beginning balance | $ 1,131,142 | |||
Net earnings common stockholders | $ 29,230 | $ 27,943 | 67,618 | $ 60,548 |
Ending balance | 1,193,686 | 1,107,043 | 1,193,686 | 1,107,043 |
Common stock | ||||
Changes in shareholder's equity | ||||
Beginning balance | 308 | 308 | 308 | 307 |
Stock plans | 1 | |||
Ending balance | 308 | 308 | 308 | 308 |
Additional paid-in-capital | ||||
Changes in shareholder's equity | ||||
Beginning balance | 308,065 | 304,184 | 304,850 | 301,553 |
Stock plans | 1,917 | 1,371 | 5,132 | 4,002 |
Ending balance | 309,982 | 305,555 | 309,982 | 305,555 |
Retained earnings | ||||
Changes in shareholder's equity | ||||
Beginning balance | 1,023,578 | 933,499 | 989,315 | 905,022 |
Net earnings common stockholders | 29,230 | 27,943 | 67,618 | 60,548 |
Dividends paid | (2,060) | (2,061) | (6,185) | (6,189) |
Ending balance | 1,050,748 | 959,381 | 1,050,748 | 959,381 |
Accumulated other comprehensive income (loss) | ||||
Changes in shareholder's equity | ||||
Beginning balance | (19,300) | (18,018) | (23,969) | (31,764) |
Foreign currency translation | (1,001) | (821) | 3,668 | 12,925 |
Ending balance | (20,301) | (18,839) | (20,301) | (18,839) |
Treasury stock | ||||
Changes in shareholder's equity | ||||
Beginning balance | (146,241) | (139,178) | (139,362) | (126,961) |
Share repurchases, net | (810) | (184) | (7,689) | (12,401) |
Ending balance | $ (147,051) | $ (139,362) | $ (147,051) | $ (139,362) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2024 | Jun. 30, 2024 | |
FAIR VALUE MEASUREMENTS | ||
Fair value impairments | $ 0 | $ 0 |
REVENUES - Disaggregation of Re
REVENUES - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Disaggregation of revenues | ||||
Revenues | $ 260,783 | $ 248,749 | $ 728,226 | $ 683,386 |
Point in time | ||||
Disaggregation of revenues | ||||
Revenues | 137,559 | 134,120 | 385,755 | 356,160 |
Over time | ||||
Disaggregation of revenues | ||||
Revenues | 123,224 | 114,629 | 342,471 | 327,226 |
United States | ||||
Disaggregation of revenues | ||||
Revenues | 181,903 | 173,288 | 515,484 | 479,144 |
International | ||||
Disaggregation of revenues | ||||
Revenues | 78,880 | 75,461 | 212,742 | 204,242 |
Commercial | ||||
Disaggregation of revenues | ||||
Revenues | 175,807 | 182,423 | 498,709 | 502,318 |
Government | ||||
Disaggregation of revenues | ||||
Revenues | 84,976 | 66,326 | 229,517 | 181,068 |
A&D | ||||
Disaggregation of revenues | ||||
Revenues | 114,450 | 103,469 | 323,884 | 285,434 |
A&D | Point in time | ||||
Disaggregation of revenues | ||||
Revenues | 53,148 | 48,496 | 146,076 | 129,355 |
A&D | Over time | ||||
Disaggregation of revenues | ||||
Revenues | 61,302 | 54,973 | 177,808 | 156,079 |
A&D | United States | ||||
Disaggregation of revenues | ||||
Revenues | 95,265 | 86,031 | 267,325 | 237,481 |
A&D | International | ||||
Disaggregation of revenues | ||||
Revenues | 19,185 | 17,438 | 56,559 | 47,953 |
A&D | Commercial | ||||
Disaggregation of revenues | ||||
Revenues | 45,404 | 45,574 | 131,993 | 128,016 |
A&D | Government | ||||
Disaggregation of revenues | ||||
Revenues | 69,046 | 57,895 | 191,891 | 157,418 |
USG | ||||
Disaggregation of revenues | ||||
Revenues | 90,277 | 89,966 | 260,570 | 240,172 |
USG | Point in time | ||||
Disaggregation of revenues | ||||
Revenues | 72,985 | 74,128 | 209,973 | 194,240 |
USG | Over time | ||||
Disaggregation of revenues | ||||
Revenues | 17,292 | 15,838 | 50,597 | 45,932 |
USG | United States | ||||
Disaggregation of revenues | ||||
Revenues | 54,063 | 55,011 | 165,789 | 154,410 |
USG | International | ||||
Disaggregation of revenues | ||||
Revenues | 36,214 | 34,955 | 94,781 | 85,762 |
USG | Commercial | ||||
Disaggregation of revenues | ||||
Revenues | 88,076 | 88,442 | 254,765 | 236,715 |
USG | Government | ||||
Disaggregation of revenues | ||||
Revenues | 2,201 | 1,524 | 5,805 | 3,457 |
Test | ||||
Disaggregation of revenues | ||||
Revenues | 56,056 | 55,314 | 143,772 | 157,780 |
Test | Point in time | ||||
Disaggregation of revenues | ||||
Revenues | 11,426 | 11,496 | 29,706 | 32,565 |
Test | Over time | ||||
Disaggregation of revenues | ||||
Revenues | 44,630 | 43,818 | 114,066 | 125,215 |
Test | United States | ||||
Disaggregation of revenues | ||||
Revenues | 32,575 | 32,246 | 82,370 | 87,253 |
Test | International | ||||
Disaggregation of revenues | ||||
Revenues | 23,481 | 23,068 | 61,402 | 70,527 |
Test | Commercial | ||||
Disaggregation of revenues | ||||
Revenues | 42,327 | 48,407 | 111,951 | 137,587 |
Test | Government | ||||
Disaggregation of revenues | ||||
Revenues | $ 13,729 | $ 6,907 | $ 31,821 | $ 20,193 |
REVENUES - Remaining Performanc
REVENUES - Remaining Performance Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2024 | Sep. 30, 2023 | |
Remaining Performance Obligations | ||
Contract assets | $ 134,600 | $ 138,600 |
Contract liabilities | 123,500 | 123,100 |
Accounts receivable | 213,592 | $ 198,557 |
Revenue recognized | 54,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | ||
Remaining Performance Obligations | ||
Remaining performance obligations amount | $ 888,700 | |
Revenue remaining performance obligation expected timing of satisfaction, Period | 12 months | |
Percentage of remaining performance obligation expected to be recognized | 68% |
LEASES - Components of lease co
LEASES - Components of lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Leases | ||||
Option to extend | true | |||
Finance lease cost | ||||
Amortization of right-of-use assets | $ 372 | $ 393 | $ 1,137 | $ 1,179 |
Interest on lease liabilities | 213 | 230 | 652 | 698 |
Operating lease cost | 1,937 | 1,858 | 5,675 | 5,356 |
Total lease costs | $ 2,522 | $ 2,481 | $ 7,464 | $ 7,233 |
Maximum | ||||
Leases | ||||
Lease term | 20 years | 20 years |
LEASES - Additional information
LEASES - Additional information related to leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ 1,867 | $ 1,792 | $ 5,510 | $ 5,172 |
Operating cash flows from finance leases | 213 | 230 | 652 | 698 |
Financing cash flows from finance leases | 331 | 334 | 1,013 | 991 |
Right-of-use assets obtained in exchange for operating lease liabilities | ||||
Operating leases | $ 515 | $ 402 | $ 2,194 | $ 14,984 |
Weighted-average remaining lease term | ||||
Operating leases | 10 years 9 months 18 days | 11 years 4 months 24 days | 10 years 9 months 18 days | 11 years 4 months 24 days |
Finance leases | 11 years 1 month 6 days | 11 years 3 months 18 days | 11 years 1 month 6 days | 11 years 3 months 18 days |
Weighted-average discount rate | ||||
Operating leases | 4.56% | 4.42% | 4.56% | 4.42% |
Finance leases | 4.69% | 4.62% | 4.69% | 4.62% |
LEASES - Reconciliation of futu
LEASES - Reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Sep. 30, 2023 |
Operating leases | ||
2024 (excluding the nine months ended June 30, 2024) | $ 1,569 | |
2025 | 6,108 | |
2026 | 4,865 | |
2027 | 4,620 | |
2028 and thereafter | 33,915 | |
Total minimum lease payments | 51,077 | |
Less: amounts representing interest | 11,334 | |
Present value of net minimum lease payments | 39,743 | |
Less: current portion of lease obligations | 4,595 | |
Non-current portion of lease obligations | 35,148 | $ 36,554 |
ROU assets | $ 37,716 | $ 39,839 |
Location of operating lease liabilities included on Consolidated Balance Sheets | Non-current portion of lease obligations, Accrued other expenses | |
Location of operating lease ROU assets included on Consolidated Balance Sheets | ROU assets | |
Finance leases | ||
2024 (excluding the nine months ended June 30, 2024) | $ 547 | |
2025 | 2,233 | |
2026 | 2,297 | |
2027 | 2,357 | |
2028 and thereafter | 16,470 | |
Total minimum lease payments | 23,904 | |
Less: amounts representing interest | 5,582 | |
Present value of net minimum lease payments | 18,322 | |
Less: current portion of lease obligations | 1,403 | |
Non-current portion of lease obligations | 16,919 | |
ROU assets | $ 14,055 | |
Location of finance lease liabilities included on Consolidated Balance Sheets | Accrued other expenses, Other liabilities | |
Location of finance lease ROU assets included on Consolidated Balance Sheets | Property, Plant and Equipment, Net |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 08, 2024 USD ($) employee facility | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | |
SUBSEQUENT EVENT | |||||
Revenues | $ 260,783 | $ 248,749 | $ 728,226 | $ 683,386 | |
Subsequent Event | Incremental Facility | |||||
SUBSEQUENT EVENT | |||||
Borrowing capacity | $ 375,000 | ||||
Subsequent Event | Signature Management & Power | |||||
SUBSEQUENT EVENT | |||||
Purchase Price | $ 550,000 | ||||
Number of facilities | facility | 4 | ||||
Number of employees | employee | 410 | ||||
Subsequent Event | Signature Management & Power | Expected | |||||
SUBSEQUENT EVENT | |||||
Revenues | $ 175,000 |