We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. We have seven operating segments that aggregate to five reportable segments. Please refer to Item 1. Business, above, for additional information regarding our segment structure and management strategy.
As part of our ongoing strategy:
o In the third quarter of fiscal year 2022, we acquired Sensor Solutions, a
designer and manufacturer of customized standard magnetic sensor products
including hall effect switch and latching sensors, linear and rotary sensors,
and specialty sensors. Sensor Solutions' customer base in automotive,
industrial, medical, aerospace, military and consumer electronics end markets
are a strategic fit and expand our presence in these markets. Sensor
Solution's operates one light manufacturing facility in Colorado. Its results
o In the third quarter of fiscal year 2021, we divested Enginetics Corporation
("Enginetics") our jet engine components business reported within our
Engineering Technologies segment, to Enjet Aero, LLC, a privately held
aerospace engine component manufacturing company. This divestiture allows us
to focus on the higher growth and margin opportunities of our core spin
forming solutions business that serves the space, commercial aviation and
defense end markets. We received $11.7 million cash consideration and recorded
a pre-tax loss on the sale of $14.6 million in the Consolidated Financial
Statements including a goodwill impairment charge of $7.6 million, assigned to
the entirety of the Engineering Technologies segment, and a $5.4 million
o During the first quarter of fiscal year 2021, we acquired Renco Electronics, a
designer and manufacturer of customized standard magnetics components and
products including transformers, inductors, chokes and coils for power and RF
applications. Renco's end markets and customer base in areas such as consumer
and industrial applications are highly complementary to our existing business
with the potential to further expand key account relationships and capitalize
on cross selling opportunities between the two companies. Renco operates one
o During the third quarter of fiscal year 2020, we initiated a program and
signed an agreement to divest our Master-Bilt and NorLake businesses (together
our Refrigerated Solutions Group or RSG). This divestiture allowed us to
continue the simplification of our portfolio and enabled us to focus more
clearly on those of our businesses that sell differentiated products and which
have higher growth and margin profiles. The divestiture was finalized and
consideration was exchanged in the fourth quarter of 2020. Results of RSG in
current and prior periods have been classified as discontinued operations in
Unless otherwise noted, references to years are to fiscal years.
Impact of COVID-19 Pandemic on the Company
Finally, we continue to monitor our ability to participate in any governmental assistance programs available to us in each of our global locations and participate in these programs as available and appropriate.
Consolidated Results from Continuing Operations (in thousands):
Selling, General, and Administrative Expenses
Discussion of the performance of each of our reportable segments is fully explained in the segment analysis that follows.
Interest expense for the fiscal year 2022 was $5.9 million a decrease of $0.1 million as compared to the prior year. Interest expense for the fiscal year 2021 was $6.0 million, a decrease of $1.5 million as compared to the prior year.
Our capital spending is focused on growth initiatives, cost reduction activities, and upgrades to extend the capabilities of our capital assets. In general, we anticipate our capital expenditures over the long-term will be approximately 3% to 5% of net sales.
Backlog orders are as follows (in thousands):
Changes in backlog under 1 year are as follows (in thousands):
Looking forward to fiscal year 2023, we expect to be well-positioned, with anticipated continued improvement in key financial metrics, supported by productivity initiatives.
In general, for fiscal year 2023, we expect:
? continued growth in transportation markets from electric vehicle programs,
? vaccine storage demand to decline after record COVID-19 related surge in
fiscal year 2021 and early fiscal year 2022, countered by a return of demand
from universities and research institutions;
? commercial aviation and defense end markets to remain strong with double digit
sales increase from the prior year based on current program expectations;
? strong Merchandising and Pumps business to benefit from return to pre-COVID-19
Income from operations in the fiscal year 2022 increased $23.8 million, or 51.1%, when compared to the prior year. The operating income increase was the result of organic sales growth, various pricing actions and cost saving initiatives, partially offset by material and freight cost increases.
In the first quarter of fiscal year 2023, we expect a slight sequential decrease in revenue and operating margin due to project mix partially offset by operational improvements.
Income from operations in fiscal year 2022 decreased by $0.4 million, or 2.1%, reflecting higher freight costs and investments in new product development, offset by revenue growth and pricing actions.
In the first quarter of fiscal year 2023, on a sequential basis, we expect slight revenue and operating margin decrease due to lower COVID vaccine storage demand.
Income from operations in fiscal year 2021 increased $4.5 million or 32.8%, reflecting revenue growth, partially offset by reinvestments in the business for future growth opportunities and increased freight costs.
In the first quarter of fiscal year 2023, on a sequential basis, we expect revenue to be similar and operating margin to slightly increase reflecting end market demand trends and the impact of pricing and productivity initiatives.
Corporate expenses in fiscal year 2022 increased $4.7 million, or 16% when compared to the prior year, primarily due to employee related compensation accruals and research and development costs.
The loss on sale of business, restructuring, and acquisition related expenses have been discussed above in the Company Overview. The increase in other operating expense in fiscal year 2022 reflects a $5.7 million litigation accrual.
Net income (loss) from discontinued operations $ (89 ) $ (2,070 ) $ (20,826 )
During the second quarter of fiscal year 2019, the Company entered into a five-year Amended and Restated Credit Agreement ("credit agreement", or "facility"). The facility has a borrowing limit of $500 million and can be increased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $10 million sublimit for swing line loans and a $35 million sublimit for letters of credit.
The following table sets forth our capitalization at June 30:
Seasonality - We are a diversified business with generally low levels of seasonality.
Employee Relations - The Company has labor agreements with four union locals in the United States and various European employees belong to European trade unions.
While we believe that our estimates of future cash flows are reasonable, changes in assumptions could significantly affect our valuations and result in impairments in the future. The most significant assumption involved in the Company's determination of fair value is the cash flow projections of each reporting unit.
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