Esco Technologies Inc. · NYSE:ESE
Esco Technologies — Investor Presentation (December 2005)
31 slides from Esco Technologies's investor presentation, Dec 1, 2005
Slide 1: NYSE Symbol: ESE December 2005
NYSE Symbol: ESE December 2005 Filtration/Fluid Flow RF Shielding and Test Communications
Slide 2: Forward-Looking Statement
Forward-Looking Statement Filtration/Fluid Flow RF Shielding and Test Communications Statements regarding future events, the development of new products, future growth drivers, performance improvements, increases in shareholder value, future IOU contracts, the success of future investments, acquisit
Slide 3: Today ESCO is...
Today ESCO is... A Proven Supplier of Special Purpose Communications Systems Primarily for the Electric Utility Industry A Leading Provider of Engineered Filtration Products to the Health Care, Aerospace and Automotive Markets Worldwide The Industry Leader in RF Shielding and EMC Test Products Spun-
Slide 4: ESCO Products & Applications
ESCO Products & Applications Test Filtration Communications 4
Slide 5: ESCO Business Profile - FY 2004 vs. 2005
ESCO Business Profile - FY 2004 vs. 2005 RF Shielding & Test Communications Filtration East 26 33 41 RF Shielding & Test Communications Filtration East 28 32 40 $119.4M 28%% $171.7M 40% $138.0M 32% Fiscal 2005 Sales = $429.1M $137.8M 33% $173.9M 41% $110.4M 26% Fiscal 2004 Sales = $422.1M 5 RF Shiel
Slide 6: ESCO Served Markets - FY 2005
ESCO Served Markets - FY 2005 Utility Communications Health Care Defesne Aerospace Electronics Commercial Aerospace Automotive Products Consumer & Appliance Video Security Industrial East 29 15 12 10 7 11 7 4 5 West North Utility Communications 29% Health Care 15% Defense Aerospace 12% Electronics 1
Slide 7: Segment Profiles
Segment Profiles Filtration/Fluid Flow RF Shielding and Test Communications All are Technically Driven Industrial Businesses Customer and Solution Focused Expanding Through New Products and Internationally 7
Slide 8: Communications Segment TWACS System
Communications Segment TWACS(r) System 8
Slide 9: Communications Market Profile
Communications Market Profile ESCO Addressable Market North American Automatic Meter Reading (AMR) ~ $5B 105 Million Meters 72% Investor Owned 15% Municipal 13% COOP Plus Developing Demand Side Management International Served Markets - - Utility - Video Security Customer Base: COOPS 1st Qtr 2nd Qtr
Slide 10: Two-way Automatic Communications System TWACS
Two-way Automatic Communications System TWACS(r) Power Line Based Fixed Network System Most Capable Proven System Available >175 North American Utilities, ~9M End Points - Ordered or Installed Can be Deployed System-wide Versatility / Value-Added Features Time of Use Outage Mapping Remote Disconnect
Slide 11: Communications Growth Drivers
Communications Growth Drivers Industry Utilities Focus Cost - Meter Reading - Theft - Call Center Customer Service - Billing Accuracy - Call Center Responsiveness - Outage Restoration Advanced Metering - Demand Response Real time pricing Critical peak pricing ESCO Existing Product Attributes (Two Wa
Slide 12: Filtration Segment
Filtration Segment 12
Slide 13: Filtration Segment Market Profile
Filtration Segment ESCO Addressable Market ~$4B Served Markets: Liquid Only - - Health Care - Automotive - - Consumer & Appl. - Aerospace Broad Blue Chip Customer Base: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 30 70 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Sales EBIT $22.4M 30% 2005 CONT
Slide 14: Filtration Growth Drivers
Filtration Growth Drivers Leadership Position in Certain Niches Driven by Technology Advancements and Customer Support Medical Devices Aerospace Fuel Delivery Served Market Growth: GDP+ New Products Health Care (Medical Components/Drug Delivery) Micro-Propulsion Devices Acquisitions Aerospace Drop-I
Slide 15: RF Shielding & Test Segment
RF Shielding & Test Segment 15
Slide 16: RF Shielding & Test Market Profile
RF Shielding & Test Market Profile ESCO Addressable Market ~ $500M Served Markets Wireless - Health Care Electronics - Acoustics Aerospace - Automotive Broad Blue Chip Customer Base: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 28 72 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1st Qtr 2nd Qtr 3
Slide 17: RF Shielding & Test Growth Drivers
RF Shielding & Test ESCO is the global leader of radio frequency (RF) shielding and electromagnetic compatibility (EMC) test products. Growth Drivers Proliferation of Wireless Devices MRI International Government Security Acoustics Calibration Services 17
Slide 18: ESCO Strategy
ESCO Strategy Filtration/Fluid Flow RF Shielding and Test Communications 18
Slide 19: ESCO Strategy
ESCO Strategy ESCO will increase Shareholder Value through Continued Investment in New Products Selective Acquisitions Ongoing Performance Improvement Actions Supported by A Strong Balance Sheet - AND - Management Team whose Interests are Strongly Aligned with the Shareholders 19
Slide 20: Investments in New Products and Technologies
Investments in New Products and Technologies Expenditures on new product development and engineering are typically 7-8% of sales New antennas for measuring EMC in frequency spectrum over 1GHz Needleless access devices Remote Disconnect Switch Interbase (DSI) option on TWACS Investments in New Produc
Slide 21: ESCO Performance Improvement Actions
ESCO Performance Improvement Actions Recent Initiatives MicroSep Divestiture - '04 P.R. Plant - 110,000 sq. ft. reduction, Relocation to Juarez Mexico (Filtertek) - '04 Structured Material Cost Reduction Initiative - '05 Key Element of ESCO Culture 22
Slide 22: Balance Sheet 9/30/2005
Solutions through — ‘innovatit Balance Sheet 9/30/2005 Cash & Equivalents $ 1045 Accounts Receivable 68.8 Inventory 53.0 Other Current Assets Total Current Assets Property, Plant & Equip, Net Other Assets Total Assets Current Liabilities Other Liabilities Long Term Debt Total Liabilities Shareholder
Slide 23: Shareholder Alignment
Shareholder Alignment Executive Equity Ownership Program Outright Ownership of 3X & 5X Total Cash Compensation Stock Sales for Diversification Allowed/Encouraged Beyond Required Ownership Levels Board of Directors Ownership Program 5X Retainer Stock Option Incentive Program (Approx. 200 Management P
Slide 24: Financials
Financials Filtration/Fluid Flow RF Shielding and Test Communications 25
Slide 25: Financial Goals
Financial Goals ESCO 5 Year View Sales Growth > 10% CAGR EBIT Margin > 18% EPS Growth > 15% CAGR 26
Slide 26: FY 2005 Segment Performance
FY 2005 Segment Performance 27
Slide 27: FY 2005 Entered Orders and Backlog
FY 2005 Entered Orders and Backlog 28
Slide 28: The Way Forward
The Way Forward Committed to $3.00 per share in '09 Growth in Communications: Advanced Metering New Products in Filtration Extend our Reach in Test Selective Acquisitions Continue to Aggressively work our Cost and Improve our Competitive Position Committed to $3.00 per share in '09 29
Slide 29: Appendix A: Reconciliation of Non-GAAP Financial Measures
Appendix A Filtration/Fluid Flow RF Shielding and Test Communications Reconciliation of Non-GAAP Financial Measures 30
Slide 30: Reconciliation of Non-GAAP Financial Measures FY 2005
Reconciliation of Non-GAAP Financial Measures FY 2005 ($M) Note: EBIT Margin greater than or equal to 18% in ESCO's Financial Goals Section cannot be reconciled with a GAAP measure as this represents a forward looking financial measure with no comparable GAAP measurement quantifiable at this time. E
Slide 31: Filtration/Fluid Flow RF Shielding and Test Communications 2
Filtration/Fluid Flow RF Shielding and Test Communications 32
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