Esco Technologies Inc. · NYSE:ESE
Esco Technologies — Shareholder Meeting (February 2002)
38 slides from Esco Technologies's shareholder meeting presentation, Feb 5, 2002
Slide 1: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING FEBRUARY 5, 2002
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains “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 February 5, 2002. The company’s actual results in
Slide 3: Agenda
Agenda a Fiscal 2001 Results = Shareholder Value Strategy ~ New Products ~ Engineering Investment a Fiscal 2002 ~ First Quarter Results - Outlook
Slide 4: ESCO Share Price - 9/30/00 — 2/01/02
ESCO Share Price - 9/30/00 — 2/01/02
Slide 5: The New Esco
The New Esco = Focused on Growth Markets a New Products Provide Growth Catalyst Technology Strength — Products & Processes Well-Established Blue Chip Customer Base = Strong Balance Sheet & Cash Flow Committed to Enhancing Shareholder Value
Slide 6: Today, ESCO Is...
Today, ESCO Is... a 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 A Proven Supplier of Special Purpose Communications Systems Based on Patented Proprietary Technology
Slide 7: ESCO Business Profile- FY '01 vs '00
ESCO Business Profile- FY ’01 vs ‘00 RF Shielding & Test Communications 6 $12.8 $12.41 4% ~~ other 3% Fiscal 2000 Sales Fiscal 2001 Sales = $300.2M = $344.9M 3)
Slide 8: ESCO Served Markets - FY 2001
ESCO Served Markets - FY 2001 Consumer & Appliance Automotive Products 14% Industrial 27% Healthcare Aerospace yO 18% 21% Electronics 13% CoN
Slide 9: Income Statement ($M)
Income Statement ($M) Net Sales Gross Profit % Sales Operating Profit % Sales EBIT % Sales Net Earnings % Sales EPS - Diluted EBITDA % Sales FY 2001 Operations FY 2000 Operations % Change $ © 344.9 108.4 31.4% 36.8 10.7% 27.4 7.9% 17.4 5.0% $1.36 42.5 12.3% $ 300.2 91.9 30.6% 30.1 10.0% @ 22.1 74% 1
Slide 10: Fiscal 2001 Summary
Fiscal 2001 Summary = Strong Earnings Growth in a Tough Economic Environment ~ Breadth of Served Markets a Major Positive = Operating Profit Margin Improvement - New Products ~ Ongoing Cost Reduction Projects - Facilities Consolidation = Communications Business Outlook Remains Strong ~ Big Pay-Off o
Slide 11: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR - New Products - Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process — Profit Margin Improvement = Strong Cash Flow
Slide 12: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR -_New Products - Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process — Profit Margin Improvement = Strong Cash Flow
Slide 13: New Product Sales
New Product Sales 49% Increase a ae ESCO Patents ° Over 150 Issued * Over 100 Pending FY '00 FY '01 Includes Products Introduced During Prior 3 Years
Slide 14: New Products
New Products
Slide 15: New Products
New Products = Two-way Automatic Communications System (TWACS) Utilizes Power Lines To Carry Signal - First Generation System Provided Only Load Control Function — Subsequent R&D Projects Greatly Expanded (TWACS) Capabilities + Automatic Meter Reading (AMR) * Distribution Automation Features + Hourl
Slide 16: PPL Project
PPL Project = DCSI Awarded Major Contract for Automatic Meter Reading (AMR) System by Pennsylvania Power & Light (PPL) = System will Service ~1.2M Residential and 170,000 Commercial & Industrial Customers = Total Contract Value of $112M = Deployment of a Test System Began in December — Full System D
Slide 17: Process Technology
Process Technology Integrated Assembly & Test Manufacturing Cell Produces Leukocyte Reduction Blood Filters = Capacity >100K Filters/Wk = Automated process Requires Minimal Direct Labor = Integrated Assembly & Test Manufacturing Cell Produces Zero Back-Flow Medical Check Valves = Each Automated Cell
Slide 18: New Products
New Products Leukocyte Reduction Blood Filter 9 ov Needlefree Connectors Zero Backflow Checkvalves Automated Mfg Cells Provide High Quality Filters & Fluid Flow Devices in High Volumes Integrated Product & Process Design Approach Results in Lowest Attainable Unit Cost Critical Processes Certified by
Slide 19: Membrane Technology
Membrane Technology = New Thin Film Composite (TFC) Nanofiltration Membrane Now Produced Internally = Used in Spiral Elements for Separation of Salt, Sugars and Proteins in Dairy Applications = Application Specific Performance Improved = Higher Flux (Flow) at the Same Retention Efficiency a Element
Slide 20: New Products
New Products New Select™ Filter Media Pleating Design Up To 35% More Filter Area In Standard 10 Inch Cartridge Extends Filter Service Life Without Compromising Flow Rate Higher Flow Rates Select™ Pleating Now Available In All Major Microfiltration Models Patent Pending
Slide 21: ChEMS Technology
ChEMS™ Technology Chemically Etched Micro Systems (ChEMS" = Chemical Micromachining of Thin Metal Sheets is Primary Manufacturing Process. = Layers are Micromachined, then Integrated to Form Modules. = Components & Connections Fabricated Simultaneously. = Integrated by Diffusion Bonding and EB Weldi
Slide 22: New Products
New Products ChEMS™ MODULES PRESSURE CONTROL y
Slide 23: New Products
New Products = Recently Completed State- of-the-Art GM Test Facility = Facility Contains Four Fully Equipped Vehicle Test Chambers = Unique Antennas are Leading Edge New Products = Other Products Include; - Doors Incorporating Patented RF Sealing Design - Absorber Materials - Turntable & Test Access
Slide 24: Antenna Technology
Antenna Technology = Full Calibration Services & RF Engineering Support also Available to Customers Newly Completed State-of-the- Art Antenna Test & Calibration Site at Austin, Tx Facility Largest, Best Equipped Test Site in North America - Low Ambient Noise - Underground Instrumentation Pit - Fixed
Slide 25: New Products
New Products RF SHIELDING Interventional Suite Door Incorporates Unique RF Seal Technology Provides RF & X-ray Protection During MRI Imaging and Surgical Procedures Patent Pending New Product Innovations Further Strengthen Our Market Leadership Position in MRI Shielding
Slide 26: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR - New Products ~ Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process — Profit Margin Improvement = Strong Cash Flow
Slide 27: ESCO FY'00 & '01 Acquisitions
ESCO FY’00 & ’01 Acquisitions ACQUISITIONS| SEGMENT APPROX SALES DESCRIPTION «= Product Line Extension / Drop-In — FILTRATION | $7 - Relocation to South El Monte Facility Complete = MRI RE Shielding Leader TEST som |= Former EMC Test Competitor = Substantial Integration Benefits = Line Extension — U
Slide 28: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR - New Products - Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process — Profit Margin Improvement = Strong Cash Flow
Slide 29: Profit Margin Improvement
Profit Margin Improvement = Disciplined Product Management ~ Responsible Pricing ~ Formal Cost Reduction Projects / Teams ~ Engineering Capability & Focus to Drive Cost Out of New and Existing Products = Force Count Management — People Productivity = Facilities / Fixed Cost Management ~ Consolidatio
Slide 30: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR - New Products - Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process - Profit Margin Improvement = Strong Cash Flow
Slide 31: Engineering Investment ($M)
Engineering Investment ($M) $30 $25 $20 $15 $10 $5 $0 fo Increase ~$28.0 FY 00 FY 01 FY 02 PROJECTED
Slide 32: Shareholder Value Strategy
Shareholder Value Strategy Sources = Sales Growth > 10% CAGR - New Products - Acquisitions = Profit Margin Improvement Initiatives — Goal: 15% Operating Profit Margin by 2005 = Strong Engineering Capability To Drive; - New Products .... Design & Process — Profit Margin Improvement = Strong Cash Flow
Slide 33: Strong Cash Flow ($M)
Strong Cash Flow* ($M) $30 ~ $25.0 $25 $20 $15 $9.6 $10 $5 $0 FY 00 FY 01 FY 02 PROJECTED * FREE CASH FLOW BEFORE ACQUISITIONS
Slide 34: Agenda
Agenda a Fiscal 2001 Results = Shareholder Value Strategy ~ New Products ~ Engineering Investment = Fiscal 2002 ~ First Quarter Results - Outlook
Slide 35: Qtr Income Statement ($000)
Qtr 1 Income Statement ($000) 18TQTR 18TQTR FY 2002 FY 2001 % Change Net Sales 84,336 82,871 1.8% Gross Profit 26,879 25,245 6.5% % Sales 31.9% 30.5% Operating Profit 8,126 8,480 4.2% % Sales 9.6% 10.2% EBIT 7,811 6,569 18.9% % Sales 9.3% 7.9% Net Earnings 4,772 3,978 20.0% % Sales 5.7% 4.8% EPS - D
Slide 36: Qtr Balance Sheet ($000)
Qtr 1 Balance Sheet ($000) Cash & Equivalents Accounts Receivable Inventory Other Current Assets Total Current Assets Property, Plant & Equip, Net Other Assets Total Assets Current Maturities - LTD Current Liabilities Other Liabilities Long Term Debt Total Liab Shareholders Equity Total Liabilities
Slide 37: Qtr Financial Highlights
Qtr 1 Financial Highlights = Earnings Growth And Positive Cash Flow In A Weak Economy = New Orders Stronger Than Expected - Bookings Exceeded Sales in All Business Segments = Backlog Increased 12%, to $202M . Pennsyl ania a Power & Light (PPL) Contract Award - Builds Momentum in Communications Busin
Slide 38: ESCO Outlook
ESCO Outlook = First Half Outlook Unchanged ($0.70 to $0.80) ~ Some Served Markets Remain Very Soft - Continue to Benefit from Breadth of Served Markets = Second Half Results Should Improve - New Product Introductions — Completion of Test Segment Consolidation Projects = Positive Cash Flow From Oper
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