Slide 1: ESCO Technologies
TECHNOLOGIES NYSE Symbol: ESE JUNE 2002
Slide 2: ESCO Heritage
ESCO Heritage Spun-off in 1990 from Emerson Primarily Defense (90%) 7 Acquisitions; 2 Divestitures Sold Last Major Defense Property in September of 1999 NEW ESCO
Slide 3: Today, ESCO is...
Today, ESCO is... A Leading Provider of Engineered Filtration Products to the Process, Health Care and Transportation Markets Worldwide The Industry Leader in RF Shielding and EMC Test Products A Proven Supplier of Special Purpose Communications Systems based on Patented Proprietary Technology
Slide 4: ESCO Products & Applications
ESCO Products & Applications Filtration Test Communications
Slide 5: ESCO Business Profile - FY '00 vs '01
ESCO Business Profile - FY '00 vs '01 RF Shielding & Test $63.0M 21% Filtration $181.7M 61% Other $12.8 4% Communications $42.7M 14% Fiscal 2000 Sales = $300.2M RF Shielding & Test $85.5M 25% Filtration $188.2M 55% Other $12.1 3% Communications $59.1M 17% Fiscal 2001 Sales = $344.9M
Slide 6: ESCO Served Markets - FY 2001
ESCO Served Markets - FY 2001 Consumer & Appliance 7% Automotive Products 14% Commercial Aerospace 9% Defense Aerospace 12% Electronics 13% Healthcare 18% Commercial 16% Industrial 11%
Slide 7: ESCO will sustain its Momentum
ESCO will sustain its Momentum through Continued Investment in New Products Ongoing Performance Improvement Actions Selective Acquisitions Supported by A Strong Balance Sheet -- AND - A Dedicated Management Team whose Interests are Strongly Aligned with the Shareholders ESCO Strategy
Slide 8: Financial Goals
Financial Goals New ESCO 5 Year View Sales Growth > 10% CAGR EBIT Margin > or equal to 13% EPS Growth > 15% CAGR
Slide 9: Momentum: Revenue Growth
MOMENTUM Revenue Growth CAGR = 20% 1999 238.4 2000 300.2 2001 344.9 Acquisition Related Growth $25.7M (11%) $28.6M (10%) (1) Excludes Divested Defense Unit.
Slide 10: Income Statement (In Millions)
Income Statement (In Millions) FY 2001 FY 2000 Operations Operations % Change Net Sales $344.9 $300.2 14.9% Gross Profit 108.4 91.9 18.0% % Sales 31.4% 30.6% EBIT (1) 30.9 24.7 25.1% % Sales 9.0% 8.2% Net Earnings 19.6 16.0 22.5% % Sales 5.7% 5.3% EPS - Diluted (4) (2)$1.53 (3)$1.26 21.4% EBITDA 42.
Slide 11: ESCO Segment Performance
Net Sales EBIT EBIT Margin Segment 2001 2000 2001 2000 2001 2000 Filtration 188.2 181.7 13.5 14.3 7.2% 7.9% Test 85.5 63.0 8.9 5.4 10.4% 8.6% Comm 59.1 42.7 11.9 8.2 20.1% 19.2% Other 12.1 12.8 (3.4) (3.2) -28.1% -25.0% Totals 344.9 300.2 30.9 24.7 9.0% 8.2% ESCO Segment Performance Years ended Sept
Slide 12: New Product Sales Outlook
New Product Sales Outlook 49% Increase ESCO Patents Over 150 Issued Over 100 Pending $47.1 15.7% Sales FY’00 $70.1 20.3% Sales FY’01 Includes Products Introduced During Prior 3 Years
Slide 13: Engineering Investment
Engineering Investment Filtration 50% RF Shielding & Test 17% Communications 27% Other 6% FY ’01 Engineering Expenditures = $25.4M (7.4% Sales) Engineering Force Count ~ 260
Slide 14: ESCO Performance Improvement Actions
ESCO Performance Improvement Actions FY ’01 Selected Data Sales up 14.9% over prior year Force count reduced 2.2% compared to prior year 3 Facilities Closed; Sq. Ft. Reduced 6.5% Operating Margin improvement of 0.7% Ongoing Test Consolidation in Austin — Will be complete Q2, FY’02 European Work Tran
Slide 15: ESCO Acquisitions: FY '00 - '02
ESCO Acquisitions: FY '00 - '02 Acquisitions Company APRIL, 2000: PURCHASED THE SPACE PRODUCTS BUSINESS OF EATON, LOCATED IN EL SEGUNDO, CA. THE COMPANY MANUFACTURERS SPECIALTY VALVES AND OTHER FLUID FLOW COMPONENTS FOR SATELLITE LAUNCH VEHICLES AND AIRCRAFT APPLICATIONS (PART OF PTI). ANNUAL SALES
Slide 16: Balance Sheet (In Millions)
Balance Sheet (In Millions) &nbs p; 9/30/01 Cash & Equivalents $14.5 Accounts Receivable 61.4 Inventory 54.8 Other Current Assets 5.5 —Includes Tax Total Current Assets $136.2 Effected NOL of Property, Plant & Equip, Net 65.0 $45.5M, retained Other Assets 174.4 ; —from former defence Total Assets $3
Slide 17: Dedicated Management
Dedicated Management Executive Equity Ownership Program Outright Ownership of 3X & 5X Total Cash Compensation Board of Directors Ownership Program 5X Retainer Broad Stock Option Incentive Program (Approx. 200 Management Participants) Economic Profit Improvement is an Incentive Compensation Component
Slide 18: ESCO Strategy
ESCO Strategy ESCO will sustain its Momentum through Continued Investment in New Products Ongoing Performance Improvement Actions Selective Acquisitions Supported by A Strong Balance Sheet -- AND - A Dedicated Management Team whose Interests are Strongly Aligned with the Shareholders
Slide 19: Segment Profiles
ESCO TECHNOLOGIES SEGMENT PROFILES
Slide 20: Filtration Segment
Filtration Segment Picture Collage
Slide 21: Filtration Segment
Filtration Segment ESCO Addressable Market ~$5B Served Markets Industrial Process (20%) Transportation Health Care (19%) Auto (20%) Consumer & Appl. (13%) Aero (28%) Broad Blue Chip Customer Base: 2001 CONTRIBUTION Sales $188.2M 55% EBIT $13.5M 44%
Slide 22: Filtration Growth Drivers
Filtration Growth Drivers Leadership Position in Certain Niches Driven by Technology Advancements and Customer Support Membrane Development Advanced Pleating Geometries Process Improvement in Insert Injection Molding Separations and Concentrations Technology Served Market Growth: 5%-10+% CAGR New Pr
Slide 23: RF Shielding & Test Segment
RF Shielding & Test Segment
Slide 24: RF Shielding & Test
RF Shielding & Test Market Profile ESCO Addressable Market ~$400M Served Markets Electronics (46%) Transportation Health Care (31%) Auto (12%) Other (2%) Aero (9%) Broad Blue Chip Customer Base: 2001 CONTRIBUTION Sales $85.5M 25% EBIT $8.9M 29%
Slide 25: RF Shielding & Test
RF Shielding & Test ESCO is the global leader of radio frequency (RF) shielding and electromagnetic compatibility (EMC) test products. Growth Drivers MRI Proliferation of Electronic Devices International Calibration Services
Slide 26: Communications Segment
Communications Segment TWACS(r) System
Slide 27: Communications
Communications Market Profile ESCO Addressable Market North American Automatic Meter Reading (AMR) ~ $6B 97 Million Meters 70% Investor Owned 15% Municipal 15% Co-op Plus Developing Demand Side Management International Served Markets Industrial (93%) - Electronics (7%) Customer Base: 2001 CONTRIBUTI
Slide 28: Two-way Automatic Communications System TWACS
Two-way Automatic Communications System TWACS(r) Power Line Based Fixed Network System Most Capable Proven System Available 40 North American Utilities, 3.5M End Points Can be Deployed System-wide Versatility / Value-Added Features Two-way Load Control Time of Use Outage Mapping Clearly the Best Sol
Slide 29: Communications Growth Drivers
Communications Growth Drivers Market Deregulation Driving More Attention to Efficiency and Customer Care $ - Meter Reading Cost - Theft - Call Center Cost Customer - Billing Accuracy - Call Center Responsiveness - Outage Restoration ESCO Existing Product Attributes Investment in New Product Features
Slide 30: YTD Performance
ESCO TECHNOLOGIES YTD PERFORMANCE
Slide 31: Income Statement (In Millions)
Income Statement (In Millions) &nbs p; 6 Mo's YTD 6 Mo's YTD &nbs p; FY 2002 FY 2001 &nbs p; Operations Operations % Change Net Sales $172.6 $169.8 1.6% Gross Profit 56.0 52.5 6.7% % Sales 32.4% 30.9% EBIT 16.2 (1) 15.3 5.9% % Sales 9.4% 9.0% Net Earnings 10.0% 9.3 7.5% % Sales 5.8% 5.5% EPS - Dilut
Slide 32: ESCO Segment Performance
ESCO Segment Performance Net Sales EBIT EBIT Margin Segment YTD 2002 YTD 2001 YTD 2002 YTD 2001 2002 2001 Filtation 92.4 91.1 5.4 5.4 5.8% 5.9% Test 34.5 44.0 2.3 4.4 6.7% 10.0% Comm 39.8 29.0 9.2 6.9 23.1% 23.8% Other 5.9 5.7 (0.7) (1.4) -11.9% -24.6% Totals 172.6 169.8 16.2 15.3 9.4% 9.0% Six Mont
Slide 33: Balance Sheet (In Millions)
Balance Sheet (In Millions) 3/31/02 Cash & Equivalents $12.6 Accounts Receivable 68.0 Inventory 50.0 Other Current Assets 21.4 --Includes Tax Total Current Assets $152.0 Effected NOL of Property, Plant & Equip, Net 66.0 $41.4M, retained Other Assets 165.4 --from former defense Total Assets $383.4 su
Slide 34: ESCO Technologies
TECHNOLOGIES JUNE 2002