ESCO is well ensconced as a global manufacturer of metal parts, castings, and components for industrial machinery. It operates through two segments: engineered products and turbine technologies. Mining customers account for the majority of sales for ESCO's engineered products, which include crusher wear-parts and bi-metallic buttons, as well as screens, blocks, tooth systems, and other heavy parts that hit the dirt and wear out. Turbine technologies makes cast parts such as blades and vanes used in the aerospace and power generation industries. ESCO was founded in 1913 as Electric Steel Foundry, which primarily made trolley car replacement parts. The company filed to go public in 2011.
Looking to raise about $175 million, the company plans to use the proceeds from its IPO to expand its manufacturing capabilities or to fund possible acquisitions. Geographically, ESCO is looking to expand its mining-related operations in Australia, Brazil, Canada, Indonesia, South Africa, and the US.
ESCO's network of more than 30 manufacturing facilities and 50 sales and distribution offices criss cross the US, Europe, the Middle East, and Asia/Pacific region.
ESCO has enjoyed steady growth over the years. From 2010 to 2011 its total sales reached historic heights, climbing by 32% to reach more than $1.1 billion. Its profits also nearly doubled from $29 million to almost $55 million. The primary reason for the increase can be attributed to ESCO's engineered products group (EPG), the company's largest segment, which experienced a 35% surge in revenue for 2011.
ESCO is pursuing growth by extending its international sales and service reach. In early 2011 it opened a sales office in Johannesburg, Africa, a location that neighbors key mining and construction companies. Simultaneously, new sales and service offices were launched in Western Australia and Canada and new distributors were introduced in Australia and New Zealand.
In late 2012 ESCO announced it was selling its less profitable turbine technologies segment to California-based Consolidated Precision Products Corporation (CPP). By selling the segment, which operates mainly in the aerospace and power generation spheres, ESCO hopes to expand its presence in the mining, oil and gas, and infrastructure markets.
Mergers and Acquisitions
On the mining side, ESCO acquired Brazier Mine Construction for an undisclosed amount in late 2012 in an asset purchase that increases ESCO's on- and near-site service offerings in the Powder River Basin in Wyoming. The deal expands ESCO's repair and maintenance services and gives it an additional base of large regional mining customers.
Earlier in 2012 the company acquired Ulterra Drilling Technologies, a maker of polycrystalline diamond compact drill bits used for constructing oil and gas wells, for about $325 million in cash. Ulterra has manufacturing operations in Fort Worth, Texas, and Alberta, Canada; the deal will fortify ESCO's position in the drilling industry and take advantage of the growing oil and gas sector in North America. – less