UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER 1-10596
ESCO TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
MISSOURI
43-1554045
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
9900A CLAYTON ROAD
ST. LOUIS, MISSOURI
63124-1186
(Address of principal executive offices)
(Zip Code)
(314) 213-7200
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class
Trading Symbol(s)
on which registered
Common Stock, par value $0.01 per share
ESE
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Shares outstanding at April 30, 2021
Common stock, $.01 par value per share
26,040,884
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2021
2020
Net sales
$
166,644
180,492
Costs and expenses:
Cost of sales
103,113
113,242
Selling, general and administrative expenses
38,746
39,982
Amortization of intangible assets
4,917
5,220
Interest expense, net
432
1,320
Other (income) expenses, net
(1,903)
703
Total costs and expenses
145,305
160,467
Earnings before income taxes
21,339
20,025
Income tax expense
5,025
2,203
Net earnings
16,314
17,822
Earnings per share:
Basic -
0.63
0.69
Diluted -
0.62
0.68
See accompanying notes to consolidated financial statements.
2
Six Months Ended
329,593
352,220
201,890
219,969
79,746
82,087
9,865
11,030
973
3,741
(1,880)
998
290,594
317,825
38,999
34,395
8,999
5,809
Earnings from continuing operations
30,000
28,586
Loss from discontinued operations, net of tax expense of $269
—
(601)
Gain on sale of discontinued operations, net of tax expense of $23,734
76,614
Earnings from discontinued operations
76,013
104,599
Basic — Continuing operations
1.15
1.10
— Discontinued operations
2.93
— Net earnings
4.03
Diluted — Continuing operations
1.09
2.91
4.00
3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
116
(6,885)
5,465
(2,962)
Total other comprehensive income (loss), net of tax
Comprehensive income
16,430
10,937
35,465
101,637
4
CONSOLIDATED BALANCE SHEETS
September 30,
ASSETS
Current assets:
Cash and cash equivalents
45,653
52,560
Accounts receivable, net
124,580
144,082
Contract assets
95,002
96,746
Inventories, net
145,342
136,189
Other current assets
17,523
17,053
Total current assets
428,100
446,630
Property, plant and equipment, net of accumulated depreciation of $140,784 and $130,534, respectively
143,401
139,870
Intangible assets, net of accumulated amortization of $138,928 and $129,063, respectively
345,261
346,632
Goodwill
411,661
408,063
Operating lease assets
18,929
21,390
Other assets
10,050
10,938
Total assets
1,357,402
1,373,523
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and short-term borrowings
20,000
22,368
Accounts payable
47,091
50,525
Contract liabilities
106,622
100,551
Accrued salaries
28,740
32,149
Accrued other expenses
44,130
50,436
Total current liabilities
246,583
256,029
Deferred tax liabilities
59,949
60,938
Non-current operating lease liabilities
14,501
16,785
Other liabilities
39,362
38,176
Long-term debt
2,000
40,000
Total liabilities
362,395
411,928
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 30,645,625 and 30,645,625 shares, respectively
306
Additional paid-in capital
295,796
293,682
Retained earnings
804,231
778,398
Accumulated other comprehensive income (loss), net of tax
1,808
(3,657)
1,102,141
1,068,729
Less treasury stock, at cost: 4,607,911 and 4,607,911 common shares, respectively
(107,134)
Total shareholders’ equity
995,007
961,595
Total liabilities and shareholders’ equity
5
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
(76,013)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
20,115
20,583
Stock compensation expense
2,745
2,896
Changes in assets and liabilities
7,401
(16,247)
Gain on sale of building and land
(1,950)
Effect of deferred taxes
(989)
834
Net cash provided by operating activities – continuing operations
57,322
36,652
Net cash used by operating activities – discontinued operations
(14,622)
Net cash provided by operating activities
22,030
Cash flows from investing activities:
Acquisition of business, net of cash acquired
(6,684)
Proceeds from sale of building and land
1,950
Additions to capitalized software
(3,973)
(4,280)
Capital expenditures
(13,153)
(21,211)
Net cash used by investing activities – continuing operations
(21,860)
(25,491)
Proceeds from sale of discontinued operations
183,997
Capital expenditures – discontinued operations
(1,728)
Net cash provided by investing activities – discontinued operations
182,269
Net cash (used) provided by investing activities
156,778
Cash flows from financing activities:
Proceeds from long-term debt and short-term borrowings
34,000
10,000
Principal payments on long-term debt and short-term borrowings
(74,368)
(145,000)
Dividends paid
(4,167)
(4,156)
Net cash used by financing activities – continuing operations
(44,535)
(139,156)
Net cash used by financing activities – discontinued operations
(2,140)
Net cash used by financing activities
(141,296)
Effect of exchange rate changes on cash and cash equivalents
2,166
875
Net (decrease) increase in cash and cash equivalents
(6,907)
38,387
Cash and cash equivalents, beginning of period
61,808
Cash and cash equivalents, end of period
100,195
Supplemental cash flow information:
Interest paid
281
3,477
Income taxes paid (including state and foreign)
14,047
23,098
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying 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 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). As a result of the pension plan termination referenced in the fourth quarter of 2020, certain prior year amounts have been reclassified to conform with the current year presentation. For further information, refer to the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
The Company’s results for the three-month period ended March 31, 2021 are not necessarily indicative of the results for the entire 2021 fiscal year. References to the second quarters of 2021 and 2020 represent the fiscal quarters ended March 31, 2021 and 2020, 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.
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 performance-accelerated restricted shares (restricted 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
Six Months
Ended March 31,
Weighted Average Shares Outstanding — Basic
26,038
25,988
25,985
Dilutive Options and Restricted Shares
163
100
154
141
Adjusted Shares — Diluted
26,201
26,088
26,192
26,126
3. SHARE-BASED COMPENSATION
The Company provides compensation benefits to certain key employees under several share-based plans providing for performance-accelerated restricted shares (restricted shares), and to non-employee directors under a non-employee directors compensation plan.
Performance-Accelerated Restricted Share Awards
Compensation expense related to the restricted share awards was $1.1 million and $2.1 million for the three and six-month periods ended March 31, 2021, respectively, and $1.1 million and $2.3 million for the corresponding periods in 2020. There were 220,430 non-vested shares outstanding as of March 31, 2021.
Non-Employee Directors Plan
Compensation expense related to the non-employee director grants was $0.3 million and $0.6 million for the three and six-month periods ended March 31, 2021, respectively, and $0.3 million and $0.6 million for the corresponding periods in 2020.
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 $1.4 million and $2.7 million for the three and six-month periods ended March 31, 2021, respectively, and $1.5 million and $2.9 million for the corresponding periods in 2020. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $0.3 million and $0.7 million for the three and six-month periods ended March 31, 2021, respectively, and $0.3 million and $0.7 million for the corresponding periods in
7
2020. As of March 31, 2021, there was $6.1 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.
4. INVENTORIES
Inventories, net, from continuing operations consist of the following:
(In thousands)
Finished goods
29,363
28,471
Work in process
37,905
30,183
Raw materials
78,074
77,535
Total inventories
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Included on the Company’s Consolidated Balance Sheets at March 31, 2021 and September 30, 2020 are the following intangible assets gross carrying amounts and accumulated amortization from continuing operations:
Intangible assets with determinable lives:
Patents
Gross carrying amount
2,136
2,092
Less: accumulated amortization
915
858
Net
1,221
1,234
Capitalized software
88,862
84,888
60,563
57,302
28,299
27,586
Customer relationships
229,322
227,178
73,864
67,643
155,458
159,535
Other
5,356
5,156
3,586
3,260
1,770
1,896
Intangible assets with indefinite lives:
Trade names
158,513
156,381
The changes in the carrying amount of goodwill attributable to each business segment for the six months ended March 31, 2021 is as follows on a continuing operations basis:
Aerospace
(Dollars in millions)
USG
Test
& Defense
Total
Balance as of September 30, 2020
271.9
34.1
102.1
408.1
Acquisition activity
2.5
Foreign currency translation
1.1
Balance as of March 31, 2021
273.0
104.6
411.7
8
The economic uncertainty, changes in the propensity for the general public to travel by air, and reductions in demand for commercial aircraft as a result of the COVID-19 pandemic have adversely impacted net sales and operating results in certain of the Aerospace and Defense reporting units. There were no impairment charges incurred for the three and six-month periods ended March 31, 2021, however, the fair value of the Mayday reporting unit exceeded carrying value by less than 10%. At March 31, 2021, we had $30 million of goodwill recorded for Mayday.
6. 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, Utility Solutions Group (USG), and RF Shielding and Test (Test). The Aerospace & Defense segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Westland Technologies Inc. (Westland), Mayday Manufacturing Co. and its affiliate Hi-Tech Metals, Inc. (collectively referred to as Mayday) and Globe Composite Solutions, LLC (Globe). 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 and 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; and metal processing services. The USG segment’s operations consist primarily of Doble Engineering Company and Morgan Schaffer Ltd. (together 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. NRG designs and manufactures decision support tools for the renewable energy industry, primarily wind and solar. The Test segment’s operations consist primarily of ETS-Lindgren Inc. (ETS-Lindgren). ETS-Lindgren is an industry leader in providing its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy. ETS-Lindgren also manufactures radio frequency shielding products and components used by manufacturers of medical equipment, communications systems, electronic products, and shielded rooms for high-security data processing and secure communication.
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 from continuing operations before interest and taxes. The table below is presented on the basis of continuing operations and excludes discontinued operations.
NET SALES
Aerospace & Defense
83,278
95,124
150,169
172,635
39,555
43,768
94,095
96,602
43,811
41,600
85,329
82,983
Consolidated totals
EBIT
18,196
21,736
27,576
34,249
6,725
4,866
19,456
14,153
5,688
5,651
10,307
Corporate (loss)
(8,838)
(10,908)
(18,090)
(20,573)
Consolidated EBIT
21,771
21,345
39,972
38,136
Less: Interest expense
(432)
(1,320)
(973)
(3,741)
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
9
Company as well as incentive compensation. A reconciliation of EBIT to net earnings from continuing operations 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.
7. DEBT
The Company’s debt is summarized as follows:
Total borrowings
22,000
62,368
Current portion of long-term debt and short-term borrowings
(20,000)
(22,368)
Total long-term debt, less current portion
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 eight banks led by JP Morgan Chase Bank, N.A., as Administrative Agent. The Credit Facility matures September 27, 2024.
At March 31, 2021, the Company had approximately $468 million available to borrow under the Credit Facility, plus the $250 million increase option, subject to lender approval, in addition to $45.7 million cash on hand. The Company classified $20.0 million as the current portion of long-term debt as of March 31, 2021, 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 $10.4 million at March 31, 2021.
Interest on borrowings under the Credit Facility is calculated at a spread over either the London Interbank Offered Rate (LIBOR), the New York Federal Reserve Bank Rate or the prime rate, depending on various factors. The Credit Facility also requires a facility fee ranging from 10 to 25 basis points per annum on the unused portion. The Credit Facility is secured by the unlimited guaranty of the Company’s direct and indirect material U.S. subsidiaries and the pledge of 100% of the equity interests of its direct and indirect material foreign subsidiaries. The financial covenants of the Credit Facility include a leverage ratio and an interest coverage ratio. The weighted average interest rates were 1.27% and 1.40% for the three and six- month periods ending March 31, 2021, respectively, and 3.24% and 3.21% for the three and six-month periods ending March 31, 2020. As of March 31, 2021, the Company was in compliance with all covenants.
8. INCOME TAX EXPENSE
The second quarter 2021 effective income tax rate from continuing operations was 23.5% compared to 11.0% in the second quarter of 2020. The effective income tax rate in the first six months of 2021 was 23.1% compared to 16.9% for the first six months of 2020. Income tax expense in the second quarter of 2021 was unfavorably impacted by a change in our estimate of the fiscal 2020 research credit increasing the second quarter and year-to-date effective tax rate by 0.6% and 0.3%, respectively. Income tax expense in the second quarter of 2020 was favorably impacted by the release of a valuation allowance of $2.8 million for foreign net operating losses decreasing the second quarter 2020 and year-to-date effective tax rate by 14.3% and 8.2%, respectively.
10
9. SHAREHOLDERS’ EQUITY
The change in shareholders’ equity for the first three and six months of 2020 and 2019 is shown below (in thousands):
Three Months Ended March 31,
Six Months Ended March 31,
Common stock
Beginning balance
Stock plans
Ending balance
Additional paid-in-capital
294,735
293,056
292,408
1,061
1,731
2,114
2,379
294,787
790,000
769,439
684,741
Net earnings common stockholders
(2,083)
(2,077)
785,184
Accumulated other comprehensive income (loss)
1,692
(40,051)
(43,974)
(46,936)
Treasury stock
(107,259)
Issued under stock plans
125
Total equity
926,207
10. 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:
Financial Assets and Liabilities
The Company has estimated the fair value of its financial instruments as of March 31, 2021 and September 30, 2020 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables, debt and other current assets and liabilities approximate fair value because of the short maturity of those instruments.
11
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, as presented below as of March 31, 2021:
Level 1
Level 2
Level 3
Assets (Liabilities):
Forward contracts
Valuation was based on third party evidence of similarly priced derivative instruments.
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 six-month periods ended March 31, 2021.
11. REVENUES
Disaggregation of Revenues
Revenues by customer type, geographic location, and revenue recognition method for the three and six-month periods ended March 31, 2021 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 on a continuing operations basis.
Three months ended March 31, 2021
Customer type:
Commercial
33,973
38,549
39,305
111,827
U.S. Government
49,305
1,006
4,506
54,817
Total revenues
Geographic location:
United States
73,037
27,445
22,965
123,447
International
10,241
12,110
20,846
43,197
Revenue recognition method:
Point in time
37,127
27,563
9,248
73,938
Over time
46,151
11,992
34,563
92,706
12
Six months ended March 31, 2021
62,114
92,414
76,027
230,555
88,055
1,681
9,302
99,038
130,849
64,490
46,231
241,570
19,320
29,605
39,098
88,023
64,000
69,931
18,116
152,047
86,169
24,164
67,213
177,546
Revenues by customer type, geographic location, and revenue recognition method for the three and six-month periods ended March 31, 2020 are presented in the tables below.
Three months ended March 31, 2020
51,550
43,736
33,952
129,238
43,574
32
7,648
51,254
81,458
28,706
25,121
135,285
13,666
15,062
16,479
45,207
46,610
32,209
8,009
86,828
48,514
11,559
33,591
93,664
Six months ended March 31, 2020
93,417
95,971
69,194
258,582
79,218
631
13,789
93,638
146,164
63,665
49,959
259,788
26,471
32,937
33,024
92,432
82,897
72,524
17,019
172,440
89,738
24,078
65,964
179,780
13
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 March 31, 2021, the Company had $521.7 million in remaining performance obligations of which the Company expects to recognize revenues of approximately 72% in the next twelve months.
Contract assets and liabilities
Assets and liabilities related to contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At March 31, 2021, contract assets and liabilities totaled $95.0 million and $106.6 million, respectively. Contract assets and liabilities are presented as current in the consolidated balance sheets as it is expected all related transaction activity with customers will be substantially completed within twelve months. During the first six months of 2021, the Company recognized approximately $56 million in revenues that were included in the contract liabilities balance at September 30, 2020.
12. 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:
Finance lease cost
Amortization of right-of-use assets
492
622
Interest on lease liabilities
311
198
Operating lease cost
1,424
1,402
Total lease costs
2,227
2,222
Ended
985
1,245
623
335
2,877
2,750
4,485
4,330
14
Additional information related to leases are shown below:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
1,375
1,380
Operating cash flows from finance leases
Financing cash flows from finance leases
419
377
2,800
2,717
838
753
Weighted-average remaining lease term
March 31, 2021
March 31, 2020
Operating leases
5.76 years
6.37 years
Finance leases
12.2 years
12.7 years
Weighted-average discount rate
3.11
%
3.08
4.31
4.28
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 Consolidated Balance Sheet on March 31, 2021:
Operating
Finance
Years Ending September 30:
Leases
2021 (excluding the six months ended March 31, 2021)
2,732
1,473
2022
4,907
3,015
2023
3,984
3,098
2024
2,438
3,181
2025 and thereafter
7,173
28,285
Total minimum lease payments
21,234
39,052
Less: amounts representing interest
1,894
9,625
Present value of net minimum lease payments
19,340
29,427
Less: current portion of lease obligations
4,839
2,001
Non-current portion of lease obligations
27,426
ROU assets
25,182
Operating lease liabilities are included in the Consolidated Balance Sheet in accrued other expenses (current portion) and as a caption on the Consolidated Balance Sheet (long-term portion). Finance lease liabilities are included on the Consolidated Balance Sheet in accrued other expenses (current portion) and other liabilities (long-term portion). Operating lease ROU assets are included as a caption on the Consolidated Balance Sheet and finance lease ROU assets are included in Property, plant and equipment on the Consolidated Balance sheets.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COVID-19 TRENDS AND UNCERTAINTIES
The COVID-19 global pandemic has created significant and unprecedented challenges, and during these highly uncertain times, our top priority remains the health and safety of our employees, customers and suppliers, thereby securing the financial well-being of the Company and supporting business continuity. Our businesses have been deemed essential and are currently operational, supplying our customers with vital and necessary products. To date, our global supply chains have not been materially affected by the pandemic. Given our diverse portfolio of strong, durable businesses serving non-discretionary end-markets, the strength and resilience of our business model positions us to continue our long-term outlook. Recognizing the uncertainty presented by this global pandemic, we are continuing to suspend our practice of providing financial guidance. Our businesses continue to face varying levels of pressure depending on the markets they serve and the impact on the Company cannot be reasonably estimated at this time. A portion of our workforce has worked from home at times due to COVID-19, however we have not had to redesign or design new internal controls over financial reporting at this time. Depending on the duration of COVID-19, it may become necessary for us to redesign or design new internal controls over financial reporting in a future period. We do not believe such an event will have a material impact on our business.
The economic uncertainty, changes in the propensity for the general public to travel by air, and reductions in demand for commercial aircraft as a result of the COVID-19 pandemic have adversely impacted net sales and operating results in certain of our Aerospace and Defense reporting units. In addition, our Westland facility had a partial shutdown of its facility for several weeks during the first quarter of 2021 due to COVID-19. We are also monitoring the impacts of COVID-19 on the fair value of assets. We do not currently anticipate any material impairments on assets as a result of COVID-19. We determined that there was no impairment for the three and six months ended March 31, 2021 and the fair value of each reporting unit substantially exceeded carrying value, with the exception of Mayday where fair value exceeded carrying value by less than 10%. At March 31, 2021, we had $30 million of goodwill recorded for Mayday. The valuation methodology we use involves estimates of discounted cash flows, which are subject to change, and if they change negatively it could result in the need to write down those assets to fair value. We will continue to monitor the impacts of COVID-19 on the fair value of assets. For further discussion, refer to Management’s Discussion and Analysis contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
See the “Outlook” and “Part II – Other Information, Item 1A, Risk Factors” sections below for additional details.
RESULTS OF OPERATIONS
References to the second quarters of 2021 and 2020 represent the three-month periods ended March 31, 2021 and 2020, respectively.
OVERVIEW
In the second quarter of 2021, sales, net earnings and diluted earnings per share were $166.6 million, $16.3 million and $0.62 per share, respectively, compared to $180.5 million, $17.8 million and $0.68 per share, respectively, in the second quarter of 2020. In the first six months of 2021, sales, net earnings and diluted earnings per share from continuing operations were $329.6 million, $30.0 million and $1.15 per share, respectively, compared to $352.2 million, $28.6 million and $1.09 per share, respectively, in the first six months of 2020.
In the second quarter of 2021, net sales of $166.6 million were $13.9 million, or 7.7%, lower than the $180.5 million in the second quarter of 2020. In the first six months of 2021, net sales of $329.6 million were $22.6 million, or 6.4%, lower than the $352.2 million in the first six months of 2020. The decrease in net sales in the second quarter of 2021 as compared to the second quarter of 2020 was due to an $11.8 million decrease in the Aerospace & Defense segment and a $4.2 million decrease in the USG segment, partially offset by a $2.2 million increase in the Test segment. The decrease in net sales in the first six months of 2021 as compared to the first six months of 2020 was due to a $22.4 million decrease in the Aerospace & Defense segment and a $2.5 million decrease in the USG segment, partially offset by a $2.3 million increase in the Test segment.
-Aerospace & Defense (A&D)
In the second quarter of 2021, net sales of $83.3 million were $11.8 million, or 12.4%, lower than the $95.1 million in the second quarter of 2020. In the first six months of 2021, net sales of $150.2 million were $22.4 million, or 13.0%, lower than the $172.6
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million in the first six months of 2020. The sales decrease in the second quarter of 2021 compared to the second quarter of 2020 was mainly due to a $6.3 million decrease in net sales at Mayday, a $5.4 million decrease in net sales at Crissair, a $4.7 million decrease in net sales at PTI primarily driven by the impact of the COVID-19 pandemic, partially offset by a $3.9 million increase in sales at VACCO driven by navy defense. The sales decrease in the first six months of 2021 compared to the first six months of 2020 was mainly due to an $11.5 million decrease in net sales at Mayday, a $9.4 million decrease in net sales at Crissair, a $9.3 million decrease in net sales at PTI, and a $1.5 million decrease in net sales at Westland primarily driven by the impact of the COVID-19 pandemic, partially offset by a $7.8 million increase in net sales at VACCO and a $1.5 million increase in net sales at Globe.
-USG
In the second quarter of 2021, net sales of $39.6 million were $4.2 million, or 9.6%, lower than the $43.8 million in the second quarter of 2020. In the first six months of 2021, net sales of $94.1 million were $2.5 million, or 2.6%, lower than the $96.6 million in the first six months of 2020. The decrease in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to lower product and service revenue at Doble primarily driven by the impact of COVID-19, partially offset by an increase in product sales at NRG.
-Test
In the second quarter of 2021, net sales of $43.8 million were $2.2 million, or 5.3%, higher than the $41.6 million in the second quarter of 2020. In the first six months of 2021, net sales of $85.3 million were $2.3 million, or 2.8%, higher than the $83.0 million in the first six months of 2020. The increase in the second quarter of 2021 as compared to the second quarter of 2020 was primarily due to higher sales from the Company’s Asian and European operations totaling $4.1 million partially offset by a $1.9 million decrease in sales from the segment’s U.S. operations due to the timing of test and measurement chamber projects. The increase in the first six months of 2021 compared to the first six months of 2020 was due to higher sales from the Company’s Asian and European operations totaling $7.7 million partially offset by a $5.4 million decrease in sales from the segment’s U.S. operations due to the timing of test and measurement chamber projects.
ORDERS AND BACKLOG
Backlog was $521.7 million at March 31, 2021 compared with $517.4 million at September 30, 2020. The Company received new orders totaling $176.2 million in the second quarter of 2021 compared to $245.6 million in the second quarter of 2020. Of the new orders received in the second quarter of 2021, $88.2 million related to Aerospace & Defense products, $44.4 million related to Test products, and $43.6 million related to USG products. Of the new orders received in the second quarter of 2020, $156.0 million related to Aerospace & Defense products, $41.8 million related to Test products, and $47.8 million related to USG products.
The Company received new orders totaling $333.9 million in the first six months of 2021 compared to $466.1 million in the first six months of 2020. Of the new orders received in the first six months of 2021, $153.6 million related to Aerospace & Defense products, $87.9 million related to Test products, and $92.4 million related to USG products. Of the new orders received in the first six months of 2020, $285.0 million related to Aerospace & Defense products, $80.3 million related to Test products, and $100.8 million related to USG products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses for the second quarter of 2021 were $38.7 million (23.2% of net sales), compared with $40.0 million (22.2% of net sales) for the second quarter of 2020. For the first six months of 2021, SG&A expenses from continuing operations were $79.7 million (24.2% of net sales) compared to $82.1 million (23.3% of net sales) for the first six months of 2020. The decrease in SG&A in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to lower discretionary spending related to travel and other discretionary expenses due to the COVID-19 pandemic.
AMORTIZATION OF INTANGIBLE ASSETS
Amortization of intangible assets from continuing operations was $4.9 million and $9.9 million for the second quarter and first six months of 2021, respectively, compared to $5.2 million and $11.0 million for the corresponding periods of 2020. Amortization expenses consist of amortization of acquired intangible assets from acquisitions and other identifiable intangible assets (primarily
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software). The decrease in amortization expense in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to a decrease in amortization of capitalized software.
OTHER (INCOME) EXPENSES, NET
Other (income) expenses, net, was $(1.9) million of income in the second quarter of 2021 compared to other expenses, net, of $0.7 million in the second quarter of 2020. The principal component of other income, net, in the second quarter of 2021 was a gain of approximately $2 million for the final settlement on the sale of the Doble Watertown, MA building, partially offset by facility consolidation charges for the Doble Manta facility. There were no individually significant items in other (income) expenses, net, in the second quarter of 2020.
Other (income) expenses, net, was $(1.9) million of income in the first six months of 2021 compared to other expenses, net, of $1.0 million in the first six months of 2020. The principal component of other (income), expenses, net, in the first six months of 2021 was a gain of approximately $2 million for the final settlement on the sale of the Doble Watertown, MA building, partially offset by facility consolidation charges for the Doble Manta facility. The principal component of other expenses, net, in the first six months of 2020 were losses on derivative instruments of $0.8 million.
The Company evaluates the performance of its operating segments based on EBIT, and provides EBIT on a consolidated basis, which is a non-GAAP financial measure. Please refer to the discussion of non-GAAP financial measures in Note 6 to the Consolidated Financial Statements, above. EBIT was $21.8 million (13.1% of net sales) for the second quarter of 2021 compared to $21.3 million (11.8% of net sales) for the second quarter of 2020. For the first six months of 2021, EBIT was $40.0 million (12.1% of net sales) compared to $38.1 million (10.8% of net sales) for the first six months of 2020.
The following table presents a reconciliation of EBIT to net earnings from continuing operations.
Less: Interest expense, net
Less: Income tax
(5,025)
(2,203)
(8,999)
(5,809)
Net earnings from continuing operations
-Aerospace & Defense
EBIT in the second quarter of 2021 was $18.2 million (21.8% of net sales) compared to $21.7 million (22.8% of net sales) in the second quarter of 2020. EBIT in the first six months of 2021 was $27.6 million (18.4% of net sales) compared to $34.2 million (19.8% of net sales) in the first six months of 2020. The decrease in EBIT in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to lower sales volumes at Mayday, Crissair and PTI partially offset by an increase in EBIT at VACCO and Globe due to the higher sales volumes as mentioned above. In addition, EBIT in the first quarter of 2021 was negatively impacted by a $0.3 million inventory step-up charge related to the ATM acquisition.
EBIT in the second quarter of 2021 was $6.7 million (17.0% of net sales) compared to $4.9 million (11.1% of net sales) in the second quarter of 2020. EBIT in the first six months of 2021 was $19.5 million (20.7% of net sales) compared to $14.2 million (14.7% of net sales) in the first six months of 2020. The increase in EBIT in the second quarter of 2021 compared to the second quarter of 2020 was mainly due to the final settlement received on the sale of the Doble Watertown facility of approximately $2 million partially offset by $0.7 million of facility consolidation charges at its Doble Manta facility, and an increase in EBIT at NRG due to higher sales volumes as mentioned above. The increase in EBIT in the first six months of 2021 compared to the first six months of 2020 was mainly due to higher EBIT at Doble driven by favorable product mix, $2 million final settlement received on the sale of the Doble Watertown facility, partially offset by $1.3 million of facility consolidation charges at its Doble Manta facility, and an increase in EBIT at NRG due to higher sales volumes.
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EBIT in the second quarter of 2021 was $5.7 million (13.0% of net sales) compared to $5.7 million (13.6% of net sales) in the second quarter of 2020. EBIT in the first six months of 2021 was $11.0 million (12.9% of net sales) compared to $10.3 million (12.4% of net sales) in the first six months of 2020. The increase in EBIT in the first six months of 2021 compared to the first six months of 2020 was primarily due to product mix and higher margins on projects mainly from the segment’s Asian operations.
-Corporate
Corporate costs included in EBIT were $8.8 million and $18.1 million in the second quarter and first six months of 2021, respectively, compared to $10.9 million and $20.6 million in the corresponding periods of 2020. The decrease in Corporate costs in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to the decrease in pension expense as a result of the defined benefit pension plan termination in the fourth quarter of 2020 and losses on derivative instruments of $0.8 million recorded in the first six months of 2020.
INTEREST EXPENSE, NET
Interest expense was $0.4 million and $1.0 million in the second quarter and first six months of 2021, respectively, and $1.3 million and $3.7 million in the corresponding periods of 2020. The decrease in interest expense in the second quarter and first six months of 2021 compared to the corresponding periods of 2020 was mainly due to lower average outstanding borrowings and lower average interest rates. Average outstanding borrowings were $23 million and $47 million in the second quarter and first six months of 2021, respectively, and $150 million and $215 million in the corresponding periods of 2020.
INCOME TAX EXPENSE
The second quarter 2021 effective income tax rate from continuing operations was 23.5% compared to 11.0% in the second quarter of 2020. The effective income tax rate in the first six months of 2021 was 23.1% compared to 16.9% for the first six months of 2020. Income tax expense in the second quarter of 2021 was unfavorably impacted by return to provision true-ups increasing the second quarter and year-to-date effective tax rate by 0.6% and 0.3%, respectively. Income tax expense in the second quarter of 2020 was favorably impacted by the release of a valuation allowance of $2.8 million for foreign net operating losses decreasing the second quarter 2020 and year-to-date effective tax rate by 14.3% and 8.2%, respectively.
CAPITAL RESOURCES AND LIQUIDITY
The Company’s overall financial position and liquidity remains strong. The effects of COVID-19 have not materially affected liquidity. Working capital from continuing operations (current assets less current liabilities) decreased to $181.5 million at March 31, 2021 from $190.6 million at September 30, 2020. Accounts receivable decreased by $19.5 million during this period due to a $12.5 million decrease within the Test segment, a $5.7 million decrease within the Aerospace & Defense segment and a $1.3 million decrease within the USG segment; due to increased focus on collections during the period and timing of payments. Inventories increased by $9.2 million during this period due to a $3.2 million increase within the Aerospace & Defense segment, a $3.3 million increase within the Test segment and a $2.7 million increase within the USG segment; resulting primarily from the timing of receipt of raw materials to meet anticipated demand and timing of manufacturing existing orders.
Net cash provided by operating activities from continuing operations was $57.3 million and $36.7 million in the first six months of 2021 and 2020, respectively. The increase in net cash provided by operating activities from continuing operations in the first six months of 2021 as compared to the first six months of 2020 was mainly driven by lower working capital requirements.
Capital expenditures from continuing operations were $13.2 million and $21.2 million in the first six months of 2021 and 2020, respectively. The decrease in the first six months of 2021 compared to the prior year period was mainly due to the building improvement additions in 2020 at the new Doble headquarters facility of approximately $7 million. In addition, the Company incurred expenditures for capitalized software of $4.0 million and $4.3 million in the first six months of 2021 and 2020, respectively.
Credit Facility
At March 31, 2021, the Company had approximately $468 million available to borrow under its bank credit facility, a $250 million increase option subject to lender approval, and $45.7 million cash on hand. At March 31, 2021, the Company had $22 million of
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outstanding borrowings under the credit facility in addition to outstanding letters of credit of $10.4 million. Cash flow from operations and borrowings under the Company’s credit facility are expected to meet the Company’s capital requirements and operational needs for the foreseeable future. The Company’s ability to access the additional $250 million increase option of the credit facility is subject to acceptance by participating or other outside banks.
Dividends
A dividend of $0.08 per share, totaling $2.1 million, was paid on October 15, 2020 to stockholders of record as of October 1, 2020. A dividend of $0.08 per share, totaling $2.1 million, was paid on January 19, 2021 to stockholders of record as of January 4, 2021. Subsequent to March 31, 2021, a quarterly dividend of $0.08 per share, totaling $2.1 million, was paid on April 16, 2021 to stockholders of record as of April 1, 2021.
OUTLOOK
Management’s current expectations for 2021 remain consistent with the details outlined in the Business Outlook section presented in the November 19, 2020 press release. In mid-year 2020, business disruptions related to the COVID-19 pandemic began to affect the Company’s operations and continued throughout the balance of the year. During 2021, the commercial aerospace and utility end-markets have seen some degree of customer stabilization, as well as notable pockets of recovery; however there is still uncertainty as to the timing and pace of the recovery in these areas. The wide distribution of viable COVID-19 vaccines is anticipated to benefit and accelerate the recovery of commercial air travel and utility spending with customers resuming normal testing protocols and equipment purchases, but Management has determined that it is advisable to wait before resuming specific guidance. Given this uncertainty, it is difficult to predict how the balance of 2021 will be affected using normal forecasting methodologies; therefore, the Company will continue its suspension of forward-looking guidance.
To assist shareholders and analysts, Management will continue offering “directional” guidance for 2021, by stating that the Company is seeing tangible signs of recovery in the second half of fiscal 2021 that point to a solid outlook for the back half of the year. The outlook for the second half of 2021 is expected to compare favorably to the second half of 2020 given the anticipated elements of COVID-19 recovery. Management’s current expectations for 2021 show growth in Sales, Adjusted EBITDA, and Adjusted EPS compared to 2020, with Adjusted EBITDA and Adjusted EPS reasonably consistent with 2019.
CRITICAL ACCOUNTING POLICIES
Management has evaluated the accounting policies used in the preparation of the Company’s financial statements and related notes and believes those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by Management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving Management judgments and estimates may be found in the Critical Accounting Policies section of Management’s Discussion and Analysis and in Note 1 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
OTHER MATTERS
Contingencies
As a normal incident of the business in which the Company is engaged, various claims, charges and litigation are asserted or commenced against the Company. Additionally, the Company is currently involved in various stages of investigation and remediation relating to environmental matters. In the opinion of Management, the aggregate costs involved in the resolution of these matters, and final judgments, if any, which might be rendered against the Company, are adequately reserved, are covered by insurance, or would not have a material adverse effect on the Company’s results from operations, capital expenditures, or competitive position.
FORWARD LOOKING STATEMENTS
Statements contained in this Form 10-Q regarding future events and the Company’s future results that reflect or are based on current expectations, estimates, forecasts, projections or assumptions about the Company’s performance and the industries in which the Company operates are considered “forward-looking statements” within the meaning of the safe harbor provisions of the Federal
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securities laws. These include, but are not necessarily limited to, statements about: the second quarter results, growth in Sales, Adjusted EBITDA, Adjusted EPS; the effects of a widely available COVID-19 vaccine; the continuing effects of the COVID-19 pandemic including any impairment of the Company’s assets, impacts to commercial aerospace, military and navy markets which the Company serves, the strength of the markets served by the Company’s Test and USG segments, and the timing of the recovery of certain end markets which the Company serves; the adequacy of the Company’s credit facility and the Company’s ability to increase it; the outcome of current litigation, claims and charges; cash flow; timing of the repayment of the current portion of the Company’s long-term debt; future revenues from remaining performance obligations; fair values of reporting units; the Company’s ability to hedge against or otherwise manage market risks through the use of derivative financial instruments; the extent to which hedging gains or losses will be offset by losses or gains on related underlying exposures; and any other statements contained herein which are not strictly historical. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, estimates, variations of such words, and similar expressions are intended to identify such forward-looking statements.
Investors are cautioned that such statements are only predictions and speak only as of the date of this Form 10-Q, and the Company undertakes no duty to update them except as may be required by applicable laws or regulations. The Company’s actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment, including but not limited to those described in Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 and in this Quarterly Report on Form 10-Q, and the following: the success and timing of available COVID-19 vaccines in ending the pandemic; the continuing impact of the COVID-19 pandemic including labor shortages, facility closures, shelter in place policies or quarantines, material shortages, transportation delays, termination or delays of Company contracts and the inability of our suppliers or customers to perform, the impacts of natural disasters on the Company’s operations and those of the Company’s customers and suppliers; the timing and content of future contract awards or customer orders; the appropriation, allocation and availability of Government funds; the termination for convenience of Government and other customer contracts or orders; weakening of economic conditions in served markets; the success of the Company’s competitors; changes in customer demands or customer insolvencies; competition; intellectual property rights; technical difficulties; the availability of selected acquisitions; delivery delays or defaults by customers; performance issues with key customers, suppliers and subcontractors; material changes in the costs and availability of certain raw materials; labor disputes; changes in U.S. tax laws and regulations; other changes in laws and regulations including but not limited to changes in accounting standards and foreign taxation; changes in interest rates; costs relating to environmental matters arising from current or former facilities; uncertainty regarding the ultimate resolution of current disputes, claims, litigation or arbitration; and the integration of recently acquired businesses.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to the Company’s operations result primarily from changes in interest rates and changes in foreign currency exchange rates. The Company is exposed to market risk related to changes in interest rates and selectively uses derivative financial instruments, including forward contracts and swaps, to manage these risks. The Company’s Canadian subsidiary Morgan Schaffer enters into foreign exchange contracts to manage foreign currency risk as a portion of their revenue is denominated in U.S. dollars. All derivative instruments are reported on the balance sheet at fair value. For derivative instruments designated as cash flow hedges, the gain or loss on the respective derivative is deferred in accumulated other comprehensive income until recognized in earnings with the underlying hedged item. There has been no material change to the Company’s market risks since September 30, 2020. Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for further discussion about market risk.
ITEM 4. CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with the participation of Management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of that date. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit Number
Description
Document Location
3.1(a)
Restated Articles of Incorporation
Exhibit 3(a) to the Company’s Form 10-K for the fiscal year ended September 30, 1999
3.1(b)
Amended Certificate of Designation, Preferences and Rights of Series A Participating Cumulative Preferred Stock of the Registrant
Exhibit 4(e) to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2000
3.1(c)
Articles of Merger effective July 10, 2000
Exhibit 3(c) to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2000
3.1(d)
Amendment of Articles of Incorporation effective February 5, 2018
Exhibit 3.1 to the Company’s Form 8-K filed February 7, 2018
3.2
Bylaws
Exhibit 3.1 to the Company’s Form 8-K filed November 19, 2019
31.1
Certification of Chief Executive Officer
Filed herewith
31.2
Certification of Chief Financial Officer
Certification of Chief Executive Officer and Chief Financial Officer
101.INS
XBRL Instance Document*
Submitted herewith
101.SCH
XBRL Schema Document*
101.CAL
XBRL Calculation Linkbase Document*
101.DEF
XBRL Definition Linkbase Document*
101.LAB
XBRL Label Linkbase Document*
101.PRE
XBRL Presentation Linkbase Document*
104
Cover Page Interactive Data File (contained in Exhibit 101)
* Exhibit 101 to this report consists of documents formatted in XBRL (Extensible Business Reporting Language). The financial information contained in the XBRL – related documents is “unaudited” or “unreviewed”.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
/s/ Christopher L. Tucker
Christopher L. Tucker
Senior Vice President and Chief Financial Officer
(As duly authorized officer and principal accounting and
financial officer of the registrant)
Dated: May 7, 2021
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